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1 Explain accounting and its purpose Accounting is the process of recording, classifying, summarizing, reporting, analyzing and interpreting information about the economic activities about an organization. This information is used by decision makers during the stewardship of their organisation. 1The purpose of accounting is to provide financial information to the major stakeholders for decision making. The main decision makers are: Managers Directors Investors Suppliers Government agencies Employees Financial information is usually provided in the form of reports which are: Income Statement (Income and Expenditure Account if its nonprofit making organisation) Balance Sheet Cash Flow Statement 1.1.1 Definitions or explanations Income statement is a statement that shows the financial performance of an organisation during a given period. It compares revenue earned during the period against the expenses incurred in earning the stated income. Revenue will be the monetary value of goods and services that has been delivered to the customers. Expense will be the monetary value of resources that have consumed in the delivery of goods and services.

Balance Sheet is a statement that shows the financial position of an organisation at a specific date. It shows the assets, capital and liabilities of an organisation. Assets are resources owned by an organisation. Assets can be divided into two categories which are fixed assets and current assets Capital is resources introduced into the business by the owners. For non profit making organisation it will be contribution that has been made by the membership. Liabilities are resources owed by an organisation to other parties. Liabilities may be divided into two categories that are long term - liabilities and current liabilities. Cash Flow Statement is a statement that shows the cash movement. That is shows where the money of the organisation came from and where it went to. 2Accounting is mainly divided into two branches which are; Financial Accounting Management Accounting Financial Accounting is mainly concerned with providing information to internal and external consumers through financial statements that have been explained earlier. Management Accounting is mainly concerned with providing information to management for planning and control. This wills reports such as budgets, performance and activity reports.

Historical Development of Accounting

Accounting has been around since the beginning of civilization. Accountants participated in the development of cities, trade, and the concepts of wealth and numbers. (Giroux) The importance of accounting cannot be overemphasized. Equally important are the standards used to guild the application of accounting practice. Without principles and standards, financial reporting would not fairly present the financial position of a company. Accounting has changed and evolved vastly over time and continues to change. I will discuss the evolution and history of accounting, the Conceptual frame work of accounting, and the governing bodies which shape the standards and principles of accounting practice. The beginning of civilization occurred during the transition from hunter-gatherer to farmer. Farming led to crop surplus and therefore the need to trade and barter. Jericho, the oldest city known to historians was the first known trading center for surplus goods. Personal wealth created the need to keep track of inventories. Ancient bookkeepers used small clay balls called tokens to count and keep track of existing wealth. These tokens were used as evidence of transactions. Over time, the tokens were used to make impressions in clay along with pictures which represented the first attempts at accounting. These events took place around 5000 B.C. (Giroux) Evidence suggests that double entry bookkeeping developed in Italy around 1200 B.C. The first book written on double entry bookkeeping was written by Luca Pacioli in 1494. (Smith) Pacioli was referred to as the father of accounting, but he did not actually invent the system he described. He simply wrote about the business practices used by merchants in Venice at the time. Many of his writings were used for several centuries. With the development of technology, wealth, and trade came the need to adequately account for the complexity involved.

How did Financial Accounting rise?

In 1913, the Sixteenth Amendment was ratified. This meant that, in addition to the corporate taxes that had been passed a few years earlier, there was now a federal income tax to be paid by all individuals working in the United States. Income tax and corporate tax were little understood and heavily resisted in their formative years. As a result, most corporations and individuals were simply not filing or were filing incorrectly. Accountants themselves were not entirely sure of items like depreciation and other tax deductions. The workload and demand for accountants, however, increased in conjunction with tax rates. (Don't miss any of your tax deductions! Check out our Income Tax Guide special feature to find out more.)

New Rules In 1917, the Federal Reserve published Uniform Accounting, a document that attempted to set industry standards for how financials should be organized both for reporting tax and for financial statements. There were no laws to back the standards so they had little effect. The stock market crash of 1929 that launched the Great Depression exposed massive accounting frauds by companies listed on the NYSE. This prompted stricter measures in 1933, including the independent audit of a company's financial statements by public accountants before being listed on the exchange. (To read more on this historic event, see How The Wild West Markets Were Tamed and The Greatest Market Crashes.)

The years 1933 and '34 also saw the Securities Act and the Securities Exchange Act pass in rapid succession. These acts became the groundwork for the Securities and Exchange Commission. The SEC instituted the regular review of financial statements and began a long trend of government regulation over both the practice of accounting and that of investing.

The SEC, in true government fashion, turned around and delegated the responsibility of establishing accounting standards to a succession of committees and boards with an ever-changing array of acronyms: AIA, CAP, AICPA and APB. Finally the current Financial Accounting Standards Board (FASB) came along in 1973. Although these boards issued pages and pages of accounting standards over the years, the final approval has always been left up to the SEC. The SEC rarely interferes, but it has struck down a rule or substituted in another every now and then just to remind the accountants who is boss. (Keep reading about the SEC in Policing The Securities Market: An Overview Of The SEC.)

Branch of Accounting Taxation- A means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs. Financial Management- The planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization.

Bankruptcy and LiquidationBankruptcy- Legal procedure for liquidating a business (or property owned by an individual) which cannot fully pay its debts out of its current assets. Bankruptcy can be brought upon itself by an insolvent debtor (called 'voluntary bankruptcy') or it can be forced on court orders issued on creditors' petition (called 'involuntary bankruptcy'). Two major objectives of a bankruptcy are fair settlement of the legal claims of the creditors through an equitable distribution of debtor's assets, and to provide the debtor an opportunity for fresh start. Bankruptcy amounts to a business-failure, but voluntary winding up does not. Liquidation- Winding up of a firm by selling off its free (un-pledged) assets to convert them into cash to pay the firm's unsecured creditors. (The secured creditors take control of the respective pledged assets on obtaining foreclosure orders). Any remaining amount is distributed among the shareholders in proportion to their shareholdings. Liquidation process is initiated either by the shareholders (voluntary liquidation) or by the creditors after obtaining court's permission (compulsory liquidation).

1. Information Technology-

Information technology (IT) is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate data, often in the context of a business or other enterprise. The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones. Several industries are associated with information technology, such as computer hardware, software, electronics, semiconductors, internet, telecom equipment, e-commerce and computer services. In a business context, the Information Technology Association of America has defined information technology as "the study, design, development, application, implementation, support or management of computer-based information systems". The responsibilities of those working in the field include network administration, software development and installation, and the planning and management of an organization's technology life cycle, by which hardware and software is maintained, upgraded, and replaced. Humans have been storing, retrieving, manipulating and communicating information since the Sumerians in Mesopotamia developed writing in about 3000 BC, but the term "information technology" in its modern sense first appeared in a 1958 article published in the Harvard Business Review; authors Harold J. Leavitt and Thomas L. Whisler commented that "the new technology does not yet have a single established name. We shall call it information technology (IT)." Based on the storage and processing technologies employed, it is possible to distinguish four distinct phases of IT development: premechanical (3000 BC 1450 AD), mechanical (14501840), electromechanical (18401940) and electronic (1940present). This article focuses on the most recent period (electronic), which began in about 1940.

Computer Systemsa system of one or more computers and associated software with common storage. A complete, working computer. Computer systems will include the computer along with any software and peripheral devices that are necessary to make the computer function. Every computer system, for example, requires an operating system.

2. What are the uses of Computer Systems?

Appropriate Use Of Computer Systems

Misuse of an automated information system is sometimes illegal, often unethical, and always reflects poor judgment or lack of care in following security rules and regulations. Misuse may, unintentionally, create security vulnerabilities or cause damage to important information. A pattern of inability or unwillingness to follow rules for the operation of computer systems raises serious concerns about an individual's reliability and trustworthiness. This topic discusses rules for using your computer. You should also read Computer Vulnerabilities, which describes in nontechnical language the security and other vulnerabilities of computer networks that make some of these rules necessary. Owing to the magnitude of problems that can be caused by misuse of computer systems, Misuse of Technical Information Systems is now one of the 13 criteria used in adjudicating approval and revocation of security clearances for access to classified information.

3. Generation of Computer Systems First Generation (1940-1956) Vacuum Tubes The first computers used vacuum tubes for circuitry and magnetic drums for memory, and were often enormous, taking up entire rooms. They were very expensive to operate and in addition to using a great deal of electricity, generated a lot of heat, which was often the cause of malfunctions. First generation computers relied on machine language, the lowest-level programming language understood by computers, to perform operations, and they could only solve one problem at a time. Input was based on punched cards and paper tape, and output was displayed on printouts. The UNIVAC and ENIAC computers are examples of first-generation computing devices. The UNIVAC was the first commercial computer delivered to a business client, the U.S. Census Bureau in 1951.

Second Generation (1956-1963) Transistors Transistors replaced vacuum tubes and ushered in the second generation of computers. The transistor was invented in 1947 but did not see widespread use in computers until the late 1950s. The transistor was far superior to the vacuum tube, allowing computers to become smaller, faster, cheaper, more energy-efficient and more reliable than their first-generation predecessors. Though the transistor still generated a great deal of heat that subjected the computer to damage, it was a vast improvement over the vacuum tube. Second-generation computers still relied on punched cards for input and printouts for output. Third Generation (1964-1971) Integrated Circuits The development of the integrated circuit was the hallmark of the third generation of computers. Transistors were miniaturized and placed on silicon chips, called semiconductors, which drastically increased the speed and efficiency of computers. Instead of punched cards and printouts, users interacted with third generation computers through keyboards and monitors and interfaced with an operating system, which allowed the device to run many different applications at one time with a central program that monitored the memory. Computers for the first time became accessible to a mass audience because they were smaller and cheaper than their predecessors. Fourth Generation (1971-Present) Microprocessors The microprocessor brought the fourth generation of computers, as thousands of integrated circuits were built onto a single silicon chip. What in the first generation filled an entire room could now fit in the palm of the hand. The Intel 4004 chip, developed in 1971, located all the components of the computerfrom the central processing unit and memory to input/output controlson a single chip. In 1981 IBM introduced its first computer for the home user, and in 1984 Apple introduced the Macintosh. Microprocessors also moved out of the realm of desktop computers and into many areas of life as more and more everyday products began to use microprocessors. As these small computers became more powerful, they could be linked together to form networks, which eventually led to the development of the Internet. Fourth generation computers also saw the development of GUIs, the mouse and handheld devices.

Fifth Generation (Present and Beyond) Artificial Intelligence Fifth generation computing devices, based on artificial intelligence, are still in development, though there are some applications, such as voice recognition, that are being used today. The use of parallel processing and superconductors is helping to make artificial intelligence a reality. Quantum computation and molecular and nanotechnology will radically change the face of computers in years to come. The goal of fifth-generation computing is to develop devices that respond to natural language input and are capable of learning and self-organization.