Standard Of Financial Accounting example essay topic

This paper will inform you on the history of Accounting, from the beginning to the present. Even how the idea of Accounting came into existence and how it's changed throughout time to become one of today's mainstream jobs for the workplace. Accounting is one of the oldest professions that there is. In fact, since prehistoric times families had to account for food and clothing.

The first record of currency began with tokens in shapes to symbolize certain commodities such as grain, and other items people needed for everyday living. These methods were used for over 5000 years, before the first writings were found. Evidence of accounting records can be found in the Babylonian Empire (4500 B. C), in pharaohs Egypt and in the Code of Hammurabi (2250 B. C). Eventually, keeping records became a necessity for governments to sustain social order.

Now, it is the time of the Renaissance and the accomplishments of man are coming to new heights. This is when a man, by the name of Fra Luca Pacioli, also known as "The Father of Accounting" would come into play and express his ideas plus his theories on Accounting. Pacioli showed the world that Accounting was one of the most important inventions know to man. Born in 1445, Pacioli was a mathematician, who was also a friend of Leonardo da Vinci. He wrote and taught in many different fields, such as mathematics, theology, architecture, games, military strategy and commerce. In 1494, he wrote a book called "Summa de Arithmetic Gemetria Porportionalita", which was on Arithmetic; but included a section dedicated to the description of Double-Entry Accounting.

The book became a major success and was translated from Italian to many other languages. Even through he was not credited for developing the system he was first to publish text on its practice. The system that he used included most of today's accounting routines such as the use of memorandums, journals, and ledgers. He described the year-end, closing entries and proposed that a trial balance be used to prove a balance ledger. There would be little modification to Pacioli's system for the next years.

Double-entry Accounting is used to catch errors to accurately track the various streams of money in your business. This made banking reliable, and also enhanced trade and commerce. By the 1800's, Scotland became the world's leader in modern Accounting. In the lat 1800's, Edinburgh society, followed by other accounting societies in Scotland and England, adopted the title of Chartered Accountant (CA) to identify its members. The first certified Public Accountant (CPA) law was passed in 1896 in the state of New York. This law required accountants to pass an examination to become certified.

There were no education requirements since most accountant were trained an apprenticeship and not by formal education. The actual exam had very little to do with Accounting, it focused on reading, writing, and arithmetic. By 1912 thirty-three states had CPA laws and by 1921 all fifty states did. In 1973 the Financial Accounting Standards Board (FASB) was founded. Its goal was to establish standard of financial accounting and reporting. Such standard are important for the creditors, investors, auditor and other people rely on credible and comparable information about their finances and the finances of others.

The FASB accomplishes this mission by acting to: improve the usefulness of Financial reporting, keep standards current, and promptly consider any faulty areas in methods of financial reporting, promote international accounting standards, and to improve the understanding of the information in financial reports. Today, computers play an important role in the field of Accounting. Different software types are doing most of accounting applications. Whether an accounting system is manual or computerized, the underlying principles of accounting are the same.