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Books > Business & Economics > Finance & accounting > Accounting > Financial accounting
Accountants were present at the creation of civilization,
maintained their importance throughout history, and proved
essential at various stages of cultural development-from the
earliest record-keeping and the invention of writing, to
double-entry bookkeeping, cost accounting of complex manufacturing,
the development of professional management and accounting (which
went hand-in-hand), through the amazing technologies of the
information age. In other words, our civilization does not exist
without sophisticated accountants and their dynamic inventions.
Telling this amazing story is the purpose of this book. The story
of accounting and how information is collected, analyzed and
disclosed is as old as-and absolutely essential to-civilization. A
fair number of key ingredients needed for modern business (and
other institutions) were invented in the ancient world-money,
record-keeping, numbers, writing, property rights, trade, banking,
the corporation. Many of the factors that are part of today's
rocket science on Wall Street date back to earlier centuries,
including the use of credit, derivatives, and stock markets-not to
mention manipulation and fraud. Financial, managerial and other
accounting information was needed for successful entrepreneurs. The
information revolution started with Gutenberg's press (which
conveniently spread Pacioli's Summa across Europe), the Industrial
Revolution with the steam engine, mass transit with the railroad,
and instantaneous communications with Samuel Morse's telegraph. The
internet represents important extensions of earlier innovations,
the latest phase of the information revolution. Accountants were
directly (or indirectly) involved in all of these and accounting
information permeates virtually every aspect of the complex culture
that is modern civilization. This book is a brief history of
accounting, focusing on the long-term importance of accounting on
issues from information accumulation and analysis around money and
finance, business and government, and continuing success as
technology and innovation expands. The focus is relatively
traditional, except it intertwines with commerce, finance, and
related business interests that make up what became modern
civilization. For example, most corporations and other entities
innovated and succeeded long-term because of increasingly complex
(and useful) accounting techniques providing necessary information
and control. This was true of Josiah Wedgwood, Andrew Carnegie, and
General Motors. Accounting applications became early uses of
computers, beginning with payroll records at General Electric in
the 1950s. From electronic spreadsheets to tax preparation, the
computer/accounting partnership continues.
Accounting is an economic information system, and can be thought of
as the language of business. Accounting principles are created,
developed, or decreed and are supported or justified by intuition,
authority, and acceptability. Managers have alternatives in their
accounting choices; the decision are political, and trade-offs will
be made. Accounting information provides individuals, both inside
and outside a firm, with a starting point to understand and
evaluate the key drivers of a firm, its financial position, and
performance. If you are managing a firm, investing in a firm,
lending to a firm, or even working for a firm, you should be able
to read the firm's financial statements and ask questions based on
those statements. This book examines some of the more advanced
topics in accounting. As such, it assumes the reader already has
some familiarity with basic accounting. (A related book covering
the basics is Accounting for Fun and Profit: A Guide to
Understanding Financial Statements). The book explains how the user
of financial statement should interpret advanced accounting
techniques presented, and helps the user conduct in-depth analysis
of annual reports. The author will show you that accounting, even
the advanced topics, can be informative and fun.
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