Summma de Arithmetica, Geometria: Proportioni et Proportionalita nOne section of the book was devoted to methods of recording merchant transactions,… [601472]

Introduction to
Accounting
Prof. Lino [anonimizat], a.y. 2015-2016
OverviewnAccountingnFinancial accounting and management accountingnHistorical backgroundnUnderstanding accounting in its real context2

3Accounting
n


the process of
identifying, measuring
and communicating
economic information
to permit informed
judgements and
decisions by users of
the information

¨
American Accounting
AssociationnAccounting as a process¨Capturing, recording, summarising, reporting, interpretingnEconomic information¨Financial & non-financialnDecision usefulness¨Broad spectrum of users
4Two types of accountingFinancial accounting
¨
Accountability results in the production of financial
statements, primarily for those interested parties who are
external to the business
¨
Provides an explanation or report in financial terms about the
transactions of an organization. nScorekeeping & Accountability(Financial reporting)
FINANCIALACCOUNTING

5Scorekeeping & Accountability
n
Accountability
: ‘
the
capacity and willingness
to give explanations for
conduct, stating how one
has discharged one
’
s
responsibilities … an
explaining of conduct with
a credible story of what
happened, and a
calculation and balancing
of competing obligations,
including moral ones
’¨Boland & Schultze
n
Accountability entails
both a narration of what
transpired and a
reckoning of money
¨
Boland &
Schultze
n
Accountability to:
Ø
Shareholders & financiersØStakeholders¨Customers, suppliers, employees, government, society
n
Scorekeeping: capturing, recording, summarizing and reporting financial performance
6Two types of accounting②Management accounting
¨
provides financial and non
–
financial information to develop and
implement strategy by budgeting for the future
(planning)
;
¨
make decisions about products, services, prices and what
costs to incur
(decision
–
making)
;
¨
ensure that plans are put into action and are achieved
(control)
.nAttention-directingnProblem-solvingnPlanningnDecision-makingnControl

7Accounting history (in short)nAncient Egypt(2500-1000 BC)n“Accounting functioned as a performative ritual that constructed coherence and order in the cosmos, on earth and in the netherworld. Accounting numbers were frequently combined with linguistic texts and pictorial scenes in architecture to produce a monumental discourse that made possible the construction and perpetuation of this orderly schema.”(Ezzamel, 2009)
nMaritime trade from Italian city-statesnCrusades –demand for exotic goodsnGenoa-Venice-Florence: A Commercial RevolutionnFirst book on accounting (1494)
The Father of Accounting: Fra Luca PaciolinHe was born in 1445 in Sansepolcro, Italy.nA dedicated Franciscan, he showed a passion for mathematicsnDid not invent double entry –but wrote the most influential early “textbook”
8

1494 –The SummanThe treatise’s official title: "Summma de Arithmetica, Geometria: Proportioni et Proportionalita" nOne section of the book was devoted to methods of recording merchant transactions, including ideas about double-entry bookkeeping.
http://www.youtube.com/watch?v=YXC3nnTkVCk9
10Accounting history (in short)nIndustrial Revolution and the rise of “cost accounting”¨Separation of ownership from management¨Exercising control over managers by absent owners¨Decentralisation & divisionalisation¨Financial accounting & management accountingnInformation revolution¨Growth of service industries¨Knowledge-based economy

Is Accounting“just” and “only” this?n“Accounting is the recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties with the information they need to make good decisions”
14
A more comprehensive framework to understand accounting in the real context
15
Accounting, Organizations and Society. Vol. 5, No. 1, pp. 5-21. Pergamon Press Ltd, 1980. Printed in Great Britain. THE ROLES OF ACCOUNTING IN ORGANIZATIONS AND SOCIETY * STUART BURCHELL, COLIN CLUBB, ANTHONY HOPWOOD, JOHN HUGHES London Graduate School of Business Studies and JANINE NAHAPIET Oxford Centre for Management Studies Abstract The paper seeks to contrast the roles that have been claimed on behalf of accounting with the ways in which accounting functions in practice. It starts by examining the context in which rationales for practice are articulated and the adequacy of such claims. Thereafter consideration is given to how accounting is implicated in both organizational and social practice. The paper concludes with a discussion of the implications for accounting research. Accounting has come to occupy an ever more significant position in the functioning of modern industrial societies. Emerging from the manage- ment practices of the estate, the trader and the embryonic corporation (Chatfield, 1977) it has developed into an influential component of modern organizational and social management. Within the organization, be it in the private or the public sector, accounting developments now are seen as being increasingly associated not only with the management of financial resources but also with the creation of particular patterns of organizational visibility (Becker & Neuheuser, 1975) the articulation of forms of management structure and organizational segmentation (Chandler & Daems, 1979) and the reinforcement or indeed creation of particular patterns of power and influence (Bariff & Galbraith, 1978; Heydebrand, 1977). What is accounted for can shape organizational participants’ views of what is important, with the categories of dominant economic discourse and organizational functioning that are implicit within the accounting framework helping to create a particular conception of organizational reality. At a broader social level, accounting has become no less influential as it has come to function in a multitude of different and ever changing institutional areas. The emergence of the modern state has been particularly important in this respect. The economic calculations provided by enterprise level accounting systems have come to be used not only as a basis for government taxation but also as a means for enabling the more general economic management *We would like to acknowledge the financial support of the Anglo-German Foundation for the Study of Industrial Society and the Foundation for Management Education. 5 23/05/14 08:33 No Accounting Skills? No Moral Reckoning – NYTimes.com
Pagina 1 di 4 http://opinionator.blogs.nytimes.com/2014/04/27/no-accounting-skills-no-moral-reckoning/?_php=true&_type=blogs&_r=0
The Great DivideNo Accounting Skills? No Moral ReckoningBy JACOB SOLLApril 27, 2014 9:04 pmThe Great Divide is a series about inequality.SOMETIMES it seems as if our lives are dominated by financial crisesand failed reforms. But how much do Americans even understand aboutfinance? Few of us can do basic accounting and fewer still know what abalance sheet is. If we are going to get to the point where we can have aserious debate about financial accountability, we first need to learn someessentials.The German economic thinker Max Weber believed that for capitalism towork, average people needed to know how to do double-entry bookkeeping.This is not simply because this type of accounting makes it possible tocalculate profit and capital by balancing debits and credits in parallelcolumns; it is also because good books are “balanced” in a moral sense. Theyare the very source of accountability, a word that in fact derives its origin fromthe word “accounting.”In Renaissance Italy, merchants and property owners used accountingnot only for their businesses but to make a moral reckoning with God, theircities, their countries and their families. The famous Italian merchantFrancesco Datini wrote “In the Name of God and Profit” in his ledger books.Merchants like Datini (and later Benjamin Franklin) kept moral accountbooks, too, tallying their sins and good acts the way they tallied income andexpenditure.One of the less sexy and thus forgotten facts about the ItalianRenaissance is that it depended highly on a population fluent in accounting.At any given time in the 1400s, 4,000 to 5,000 of Florence’s 120,000inhabitants attended accounting schools, and there is ample archival evidenceof even lowly workers keeping accounts.This was the world in which Cosimo de’ Medici and other Italians came todominate European banking. It was understood that all landowners andprofessionals would know and practice basic accounting. Cosimo de’ Medicihimself did yearly audits of the books of all his bank branches; he alsopersonally kept the accounts for his household. This was typical in a worldwhere everyone from farmers and apothecaries to merchants — even NiccolòMachiavelli — knew double-entry accounting. It was also useful in politicaloffice in republican Florence, where government required a certain amount oftransparency.If we want to know how to make our own country and companies moreaccountable, we would do well to study the Dutch. In 1602, they inventedmodern capitalism with the foundation of the first publicly traded company —the Dutch East India Company — and the first official stock market inAmsterdam. But it was through an older and well-maintained culture ofaccountability that they kept these institutions stable for a century. Thespread of double-entry accounting to the Netherlands during the early 1500smade the country the center of accounting education, world trade and earlycapitalism. Well-accounted-for provincial tax returns allowed the Dutch tofloat bonds at dependable 4 percent interest rates. The Dutch trusted their