This accounting field was found by the Luca Pacioli which is known as the Italian mathematician. “Language of Business” is what accounting had been known as over centuries. In accounting, the better you understand it hence the better the management of the financial aspects of businesses will be. All modern business financial activities relies on accounting. It measures the economic activities of organizations, companies or businesses and it process the information into reports then convey it to the users.
There are several kinds of accounting such as financial accounting, management accounting, external auditing, tax accounting and last but not least the cost accounting. Financial accounting focuses on the reports of an organization’s financial details. The output of an accounting is called as financial statement.
The records of financial transactions will be summarized into financial reports which known as bookkeeping which is written in the form of double entry system. This double entry system said in the history as it was developed in the medieval Europe back then and got split into two types of accounting which is financial accounting and management accounting. While financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company, managerial accounting provides accounting information to help managers make decisions to manage the business.