Accounting

This paper will discuss the purpose of accounting and some of the origins of accounting.

This paper will also break down and explain the four financial statements and how they are interrelated within themselves. This will be a brief over view of the accounting financial statements.

Purpose of Accounting: Accounting is a body of Principles and conventions as well as and established general process for capturing financial glimpse of a corporation history and financial standing within the organization (Hendrickson, 2007). This information is used to make critical decisions by using numbers to establish a process to approve or disapprove a project. Other ways that accounting affects business is to get a glimpse of a profit of a product. How much money is being spent into develop the product for the consumer. Accounting helps also helps investors see the financial standing of a company.

Origins of Accounting: Modern accounting is trace back to and Italian monk Luca Pacioli (Hendrickson, 2007). Luca Pacioli develops the double-entry system which is still used today in all types of entities (Hendrickson, 2007). Though out history the book keeper was thought of as a valuable staff member of a company, someone that knew where the money was going (Hendrickson, 2007). As business became more complex the book keeper’s job became more complex. It evolved into what we call CPA’s or Accountants in today’s society (Hendrickson, 2007).

Income Statement: The income statement gives the company a picture of net loss or profits (Weygandt, 2008). This statement will show the products that are making the company money (Weygandt, 2008). As well as the products that is losing the company money (Weygandt, 2008). This statement looks at a period of time within the company’s history (Weygandt, 2008).

Retained Earnings: The Retained earnings statements summarizes the changes in retained earnings for a specific period of time (Weygandt, 2008). During this period of time in a...