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Frequently Asked Questions: What Is Accounting?

Luca Pacioli is considered the father of accounting and bookkeeping due to publishing a book on double-entry bookkeeping in 1494. By 1880, the modern accounting profession was established with the formation of the Institute of Chartered Accountants in England and Wales, which created many of the systems accountants use today in response to the needs of merchants during the Industrial Revolution. Accounting involves maintaining accurate financial records of transactions and compiling them into statements to help businesses manage their finances.

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71 views3 pages

Frequently Asked Questions: What Is Accounting?

Luca Pacioli is considered the father of accounting and bookkeeping due to publishing a book on double-entry bookkeeping in 1494. By 1880, the modern accounting profession was established with the formation of the Institute of Chartered Accountants in England and Wales, which created many of the systems accountants use today in response to the needs of merchants during the Industrial Revolution. Accounting involves maintaining accurate financial records of transactions and compiling them into statements to help businesses manage their finances.

Uploaded by

Kendrew Sujide
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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uca Pacioli is considered "The Father of Accounting and Bookkeeping" due to his contributions

to the development of accounting as a profession. An Italian mathematician and friend of


Leonardo da Vinci, Pacioli published a book on the double-entry system of bookkeeping in
1494.8

By 1880, the modern profession of accounting was fully formed and recognized by the Institute
of Chartered Accountants in England and Wales.9 This institute created many of the systems by
which accountants practice today. The formation of the institute occurred in large part due to the
Industrial Revolution. Merchants not only needed to track their records but sought to avoid
bankruptcy as well.

Frequently Asked Questions


What is accounting?
Accounting is a profession whose core responsibility is to help businesses maintain accurate and
timely records of their finances. Accountants are responsible for maintaining records of a
company’s daily transactions, and compiling those transactions into financial statements such as
the balance sheet, income statement, and statement of cashflows. Accountants also provide other
services, such as performing periodic audits or preparing ad-hoc management reports.

What skills are required for accounting?


Accountants hail from a wide variety of backgrounds. Generally speaking, however, attention to
detail is a key component in accountancy, since accountants must be able to diagnose and correct
subtle errors or discrepancies in a company’s accounts. The ability to think logically is also
essential, to help with problem-solving. Mathematical skills are helpful, but are less important
than in previous generations due to the wide availability of computers and calculators.

Why is accounting important for investors?


The work performed by accountants is at the heart of modern financial markets. Without
accounting, investors would be unable to rely on timely or accurate financial information, and
companies’ managements would lack the transparency needed to manage risks or plan projects.
Regulators also rely on accountants for critical functions such as providing auditors’ opinions on
companies’ annual 10-K filings. In short, although accounting is sometimes overlooked, it is
absolutely critical for the smooth functioning of modern finance.

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