Don’t Worry about failure; you only have to be right once – Drew Houston

     Importance of Accounting

Accountancy is the process of communicating financial information about a business entity to users such as managers and shareholders. The communication between them is usually in the form of financial statements which show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is trustworthy. Accountancy principles apply to business entities in three divisions of practical art, auditing, and bookkeeping and named accounting.

The history of Accounting is thousands of years old; the earliest accounting records, which are about more than 7,000 years old, found in Mesopotamia (Assyrians). That time, people relied on primitive accounting methods to record the growth of crops and herds. Accounting developed, getting better over the years and advancing as business advanced.

Today, accounting is known as "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting, which focuses on reporting to people inside the business entity is called management accounting and is used to provide information to employees, auditors, owner-managers and managers. Management accounting is involved principally with providing a basis for making management or operating decisions.

Accounting that gives information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors, for example, vendors or banks, economists, financial analysts and the government organizations. The reason behind that these users have different requirements, the presentation of financial accounts is very structured and subject to many more rules than management accounting. The anatomy of rules which governs financial accounting in a given jurisdiction is called GAAP (Generally Accepted Accounting Principles). Other rules include IFRS (International Financial Reporting Standards) or US GAAP.

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