Financial and Cost Accounting, Taxes and Economic

Accounting is one important point when we have a business. So, now let’s learn what is accounting.
The American Accounting Association defines accounting as follows:
"The process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.
From the definition above, let’s analyze each word to know more about accounting process.

** Identifying: the first process here is identifying, actually identifying what? Identifying means we will identify the transactions that we have so we can classify the transactions into suitable account. It is done based on a system of accounting known as double-entry bookkeeping or we can say as a journal.

** Measuring: The "measurement" of accounting information is not a straight-forward process. it involves making judgements about the value of assets owned by a business or liabilities owed by a business. it is also about accurately measuring how much profit or loss has been made by a business in a particular period. As we will see, the measurement of accounting information often requires subjective judgement to come to a conclusion. (TUTOR)

** Communicating: this words means accounting has a purpose as a communicating tool to inform accounting information to who needs the data. Usually we will use “financial statement” as a communicating tool. From wikipedia we can know that financial statement usually used are balance sheet, income statement, capital statement and cash flow statement. At the next chapter we will try to discuss more about financial statement.

The basic of accounting is on the double entry bookeeping system. Using this system means we will entry one transaction into two accounts, one on the debit side, and the others on the credit side. By using thi system it can make easier for us to analyse when we have a mistake.

Accounting as an art which is based on double entry book keeping sytem already known in Italy since 1495, when Luca Pacioli (1445-1517), who also known as Friar (Romo) Luca dal Bargo, published his book in Venice, the first english book which is published in London by Jogn Gouge or Gough in 1543.