A Brief Description of Accountancy
Accountancy can be described as the way of communicating the financial information to the people and entities that require this information. In a way it can be said that the term accountancy gives a true picture of the economic resources that are under the control of the management. Accountancy can also be defined as the use of mathematical tools as well as resources to get a correct picture of the causes that are responsible for the success or failure of the business entity or any business venture of the company.
The precise definition of Accountancy is the way of recording and classifying the events as well as transactions in the monetary terms and then interpreting the results in the correct manner. The field of accountancy has a long history that dates back to more than 7000 years. In the earlier times it was only meant to keep track of the growth of herds as well as crops that played a crucial part in the primitive man’s life. As the complexity in the businesses increased, the field of accountancy also evolved in order to meet the requirements of the ever evolving business processes.
The rudimentary methods of accountancy were unable to keep up with the business ventures that involved multiple investors and thus the process of double entry bookkeeping evolved in northern Italy. This need emerged as the business endeavors; primarily the trading ventures that began to take place in those times required multiple investors as it was beyond the means of a single individual to invest in such business efforts. The evolution of joint stock companies shaped a wider audience for these accounts as the people who had invested in the businesses relied a great deal on these accounts to get the information on the results of their efforts. As a result, the filed of accountancy got separated into two branches that were the management accountancy and the financial accountancy. The management accountancy was meant for the internal knowledge of the companies whereas the financial accountancy was meant for the external purposes. In the present day world, accountancy is very rightly defined as the “language of business” as it is the only way the companies and other people can get to know the results as well as the true standing of their businesses in the market.