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Introduction to Accounting - Coggle Diagram
Introduction to Accounting
Accounting
Used by
Economic entities
For-profit organizations, non-profit organizations, public organizations.
They all have
Economic operations
Cash payments, credit purchases, sales and expenses, depreciation of fixed assets
Services, commerce, manufacturing.
Used to
Record economic operations
Produce financial information
Used by
Owners, clients and suppliers, employees, government.
Banks, investors, unions.
Objective
Provide financial information useful for decision-making
History of accounting
Mesopotamia
Egypt
Essentially the same motives as Mesopotamia, only more complex.
Rome
Proper records of revenues and expenses were implemented. Along with the addition of debt.
European Middle Ages
The Medici family ruled like an European bank system, starting the use of checks.
Renaissance (Fra Luca Pacioli)
Fra Luca Pacioli writes a book detailing the Double Entry System.
Modern Era
Accounting has become an important part of technology through the use of software.
Electronic Accounting
Improvements were made to increase security and validity of invoices and other accounting services
Started to record their tax-payer contributions, knowing the quantity and uses of the taxes.
Types of accounting
Financial accounting
Handles the preparation and presentation of Financial Statements for decision-making
Administrative accounting
It is used internally to evaluate the development of an entity according to its objectives, along with the planification of the future of said entity
Cost accounting
Mainly used by manufacturing companies to determine the production cost and the break even point
Tax accounting
Encompasses the tax payments, annual tax statements and a remarkable difference between fiscal and financial accounting
Governmental accounting
Ruled by CONAC in Mexico, it records the economic operations ruled by a legal framework