Accounts The Overview..

Accountancy, or the accounting, is the production of information about an enterprise and the transmission of that information from those who have it to those who need it. The communication is generally in the form of financial statements that 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 representationally faithful. The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.

Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest.

Today, accounting is called "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors.

Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies.

In the IETF RFCs the act of accounting is usually defined as the act of collecting information on resource usage for the purpose of trend analysis, auditing, billing, or cost allocation.

For example when a user uses a connectivity service paid with a pay-per-view approach the accounting process is based on a metering of the resource usage by the user usually time spent with an active connection or the amount of data transferred using that connection. The accounting is hence the recording of this connectivity service consumption for subsequent charging of the service itself.

Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

Ø management accounting information is:

Ø primarily forward-looking, instead of historical;

Ø model based with a degree of abstraction to support decision making generically, instead of case based;

Ø designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators;

Ø usually confidential and used by management, instead of publicly reported;

Ø computed by reference to the needs of managers, often using management information systems, instead of by reference to general financial accounting standards.

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