Examining Accounting As A Historical Practice Accounting Essay

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Accounting is the art of communication financial information about a business entity to users such as shareholders and managers. Accounting has been used in human society for more than 7000 years, so as I pursue in depth study, I try to find out the history of the accounting, how Accounting been use differently compare to the past? What important role does Accounting play in the human society? What are the Accounting policies and ethics? How Accounting has been practices differently between countries? How do we gain some value from Accounting?

Since prehistoric times, families had to account for food and clothing to face the cold seasons (DeSantis, 1995). Later, as man began to trade, we established the concept of value and developed a monetary system. 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, with the advent of taxation, record keeping became a necessity for governments to sustain social orders.

In 1494, Fra Luca Pacioli wrote his "Summa" dealing with record keeping and double-entry accounting, one of the very first published books of the time that would become the accounting "textbook" for the next 500 years. The Summa was one of the first books published on the Gutenberg press, became an instant success and was translated into German, Russian, Dutch, and English. The Summa made Pacioli a celebrity and insured him a place in history, as "The Father of Accounting.

Pacioli's accounting system has not changed practically for the last 500 years, and as long as our wealth was physical and our costs included mostly material and labor, this system was adequate. The double-entry accounting system relied on historical information and has traditionally provided financial reports and statements two weeks after the month-end closing period. Businesses today, require information not two weeks after month-end but immediately; accounting information, activities and indices of performance must be available at the push of a button. The trend in the information age is to conceptualize and implement accounting as a data base information system gathering all the quantitative and qualitative events of all the areas of a company.

Accounting need to gather a bulk of information and its purpose is to show how the entity has performed over a particularly period of time. Obvious, this requires a complicate process and accurate information to accomplish it. In the Virginia, finding opportunities to learn accounting subject is not difficult. For instance, George Mason University has offer the Accounting courses from beginning level to MBA level. GMU also have many activities relate to accounting major, Beta Alpha Psi which is one of activities for the national honorary and service fraternity of financial information professionals. Activities include frequent meeting with presentations by members of the Accounting and Financial services professions.

Accounting research can also be enhanced by organization like American Accounting Association (AAA). AAA holds an annual meeting in August 15; its mission is to foster worldwide excellence in the creation, dissemination and application of accounting knowledge and skill. Another organization, the Iclub Central helping investment clubs track their finances through accounting software to develop long term forecast on annual budgeting.

Accounting policies and ethics are vital important in business world (Williams, 2009). This is because of the trust placed in professionals who conduct complex and sometimes arcane tasks. The general public needs to make sure that those who are doing accounting practice would adhere to high standard in their conduct. These ethical codes, enforced by professional organizations, go beyond regulations and laws. There are three organizations that provide a code of ethics for accountants. They are the American Institute of Certified Public Accountants (AICPA); the Institute of Management Accountants (IMA) and the Institute of Internal Auditors (IIA). By joining one of these professional organizations, accountants agree to the principles that guide their profession. While each group has a slightly different role in the accounting process, the ethical code is the same: They provide a positive set of statements and guidelines for CPAs. The specifics of the rules of conduct are explicit about what should or shouldn't be done by a professional accountant.

The goal of the three groups is to define the responsibilities of a professional accountant. They require that a professional accountant exercise sufficient diligence and care in practicing her profession. They do not allow the disclosure of confidential information, whether it is financial or otherwise. However, accountants do not have the option to exercise the accounting version of attorney-client privilege; they are subject to questioning in court and can be subpoenaed for that purpose.

Accounting has been practices differently between countries (Cochran 2010). Although accounting standards and practices are the same across the board in their origin, the accounting and taxation structures of different countries around the world makes them vary between countries. For example, Japan, France, Brazil, Switzerland and Netherlands are allowed cost of Research and development in the balance sheet, but not in Germany or the United States. Similarly, book and tax timing differences being recorded on the balance sheet as deferred taxes is required in the United States and the Netherlands, but merely allowed in some cases in the other countries. These accounting differences could really cause conflict between countries because of international transactions and stuff. There are substantial questions of competitive advantages and informational deficiencies that may result from these continuing differences across countries. Some of the differences between countries include fixed asset revaluations stated at an amount in excess of the cost, inventory valuation using LIFO, finance leases capitalized, pension expense accrued during period of service, current rate method of currency translation. The differences in accounting principles between countries could really cause inconsistencies between international operations. Maybe if an international standard were set for all countries, there would be less quarreling and more agreement in accounting between countries. That way there would be less discrepancy in the accounting principles and the balance sheets for each country.

Accounting is a field that requires you do a lot of research. Because of update information annual from IRS (Internal Revenue Service), Accountant needs to found news of journal, article, or magazine (website provided in the appendix) to gain some newly information for tax purpose at the end of each year. For example, anyone who purchase house as a first home buyer before April 30, 2010 would qualify a tax deductable up to $8000.00 dollars (Gopal, 2009). Accounting is extremely careful about what is considered a reliable source. A reliable source for information could be obtained from GMU Library. It is available online at George Mason University database. It is also available in the reference section of Fenwick Library next to Robinson Hall.

Other way to obtain reliable information would be accounting seminar. One of the top seminars in Washington DC area is American Management association. This seminar gives you the skills to handle the special accounting and reporting requirements and deals with the most recent changes affecting these organizations, review internal controls, financial statement requirements and the FASB codification. American Management Association also provide a learning lecture to people who are not certain what Accounting would be or whether you want to enter the Accounting world and become a Accountant.

Accounting has become one of important tool use in business field. By providing an Appendix, we can learn deeper insight of value and make Accounting as a useful tool to our daily life.


DeSantis, J. (1995). A Brief history of accounting: from prehistory to the information age. Pacioli 2000 for Windows, Retrieved from http://ensign.ftlcomm.com/historyAcc/ResearchPaperFin.htm

Cochran, S. (2007). Accounting differences and their impact on international practices. EquineKingdom, Retrieved from http://www.equinekingdom.com/miscellaneous/stuff%20I%27ve%20written/accounting%20differences.htm

Gopal, P. (2009). Who Qualifies for new homebuyer tax credit?. Business Week, Retrieved from http://www.businessweek.com/the_thread/hotproperty/archives/2009/11/who_qualifies_f.html

Williams, C. (1999). The Accounting code of ethics. Business Management, Retrieved from http://www.ehow.co.uk/about_4675068_accounting-code-ethics.html