IMPACT OF INDUSTRIAL REVOLUTION ON ACCOUNTING (CA 1760 - 1840) image…
IMPACT OF INDUSTRIAL REVOLUTION ON ACCOUNTING (CA 1760 - 1840)
Industrial revolution lead to creation:
Secondary Industries (various manufacturing industries processing materials)
Rapid factory system expansion
Sophisticated accounting needed.
Creation of accounting sub categories
Cost accounting (emerged prominently with factory system)
Management accounting (emerged from cost accounting)
Costs to be assigned to manufacturing activities.
Assigning activity costs (direct and indirect):
Non manufacturing costs (advertising, administration etc.)
Provide financial /non- information to internal stakeholders:
Record, plan and control activities for decision making.
Strategizing and implementation
Profit maximization and efficient management.
Economy growing exponentially
Expanding population; Expanding cities; Expanding communities (urbanization)
Increased state service dependence (roads; transport; waste; water etc.).
Increased wealth and education.
Mainstream money economy
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