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3.9: Introduction to Accounting

  • Page ID
    45793
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    What you’ll learn to do: define accounting

    What we think of as accounting can be divided into two distinct functions: bookkeeping, and accounting. The bookkeeping function, recording transactions, is as old as commerce itself, having arisen as a necessity of recording for taxes, business, and investments. In fact, Luca Pacioli, and Italian mathematician who collaborated with Leonardo da Vinci, mentions double entry booking in his his 1494 “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.”

    As the world of business grew and expanded, so did the complexity and variety of accounting practices, and so did the opportunity for profits and losses for investors. Today, accounting is the application of theoretical principles to the books and records of the company in order to produce useful information for decision-making, by following, in the U.S., Generally Accepted Accounting Principles (GAAP).

    In this section, we’ll define accounting, examine the financial standards, and describe the importance of ethics in accounting.

    A diagram representing flow from economic activity to shades of gray to accounting judgements to useful information to good decisions to a prosperous society.
    CC licensed content, Original
    • Introduction to Accounting. Authored by: Joe Cooke. Provided by: Lumen Learning. License: CC BY: Attribution
    CC licensed content, Specific attribution

    3.9: Introduction to Accounting is shared under a not declared license and was authored, remixed, and/or curated by LibreTexts.

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