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C1-Orientation (Development (Cost accounting (Problems (Arose after world…
C1-Orientation
Development
Accounting grew slowly during time of major events
It was carefully developed and matured
Events
Wars
Industrial Revolution
Growth of business corporations
Increased public holdings of securiteis
Caused need to expand bookkeeping into accounting
Cost accounting
Created by the need for managerial control over production
Made more progress at the start of the 20th century
Industrial mass production
Use of accounting to connect cost and profit
Problems
Arose after world war I
especially in the depression
Showed large problems with financial statements
Resulted in numerous regulations
Auditing
Created by need to protect investors from fraud
Made more progress in the 19th century(1800s) than cost accounting
New laws were created to require balance sheets to be audited
Accountants became a profession
Desire for independent scrutiny of accounts
Bank loans
Investors
Conflicts
Struggle of conflicted bookkeeping systems
Italian method verse western Europe
Modified transmitted Italian methods
Developed from debits and credits to F/S and summary accounts
Also time when great trading companies emerged
Intro
Theory and practice are inseparable
To understand one fully, requires the other as well
Orienting accountancy requires looking at history
Just as airplane require looking at certain facts
Luca Pacilo
First to combine math and bookkeeping
Transformation into modern society
Bookkeeping existed before his book
Summary
Accounting is not just a tool for money
But also a tool for social welfare
And a tool for navigation towards two missions
Way for people to earn a living
Way to develop products and services for people to use in living
Regulations help aid in pulling out bad actors and do common good
Profit is paid to effective enterprisers and managers