INTRODUCTION TO BOOK-KEEPING AND ACCOUNTING.

1.1

         In any giving society people engage in one transaction or the other.

Transaction is the process by which goods or services exchanged hand between two or more persons. It can be in form of trading or providing one service or the order to the  people, all these are done in other to make profit or gain.

Some of the people who engage in transaction keep accurate records of  their dealings, while other do not. Those who do not keep accurate records, cannot tell accurately at any time the value of their assets and liabilities and other   financial activities.

In other to overcome these constraints. book-keeping and accounting was introduced.
 The development of modern book-keeping and accounting can be traced as for back as 1445-1555. that was when an Italian mathematician by name Rev. Father Luca-Pacioli introduced the present principle of book-keeping and accounting called “Double Entry System”

1.2      Definition of Book Keeping

It can be defined as the act of recording business transaction in a systematic, orderly and regular manner so as to ascertain the financial position of a business at given time.

The recording phase of accounting is called book-keep. But accounting extends far beyond recording purpose.

1.3      Definition of Accounting

It is the process by which information that relate to financial and economic activities of business organization are classified, recorded, measured and communicated to interested parties for analysis interpreted and used.

1.4 The parties that may be interested in accounting information (Users) are:

  

         1.        Managers

                  2.        Employees

                  3.        Creditors

                  4.        Financial analysts

                  5.        Government

                  6.        Public

        7.        Tax authorities

        8.        Banks

        9.        Shareholders etc

1.5       Difference Between Book-keeping and Accounting

	BOOK-KEEPING	ACCOUNTING
1	It need no higher qualification for Practitioners	Required higher qualification for practitioners
2	Concerned with  recording of transactions	concerned with more than recording of transactions
3	First step in preparing accounting records	sub-sequent step in preparimg accounting records
4	It can exist without accounting	Cannot exist without book-keeping
5	Management does not read much on book-keeping for decision      ma king	This is the basis of management decision making in financial matters.
6	It does not tell much of the financial position of the business	Classify account with books of original entries, ledger, nominal and real account.
7	Do not ascertain the profitability of the business.	Capable of ascertaining the profitability of a business. Telling or showing the financial position of a business at any time.

1.6   THE USES OF ACCOUNTING INFORMATION

1.  
   It is use for decision making process.

2.     It makes permanent records available for all financial transaction.

3.     It is use to determine the profitability of a business.

4.     Accounting records are use for tax management.

5.     Its usage help to detect and prevent fraudulent practices.

6.     Its records is capable of showing income and expenditure.

7.     It can also show assets and liabilities.

1.7   THE BENEFIT/NEEDS OF BOOK-KEEPING AND ACCOUNTING

The benefit/needs of book-keeping and accounting cannot be overemphasized. There is no sphere of economic and business life of the society that accounting is not making use of. For the business to succeed; it has to keep good records of its financial transactions.

The one man business i.e. the sole trader, partnership, big public company, government agencies and parastatles as well as government itself make use of accounting.

Government makes use of accounting in the determining balance of payment, gross national product and other  purposes such as the preparation of balance sheet etc

  In summary the benefit of book-keeping and accounting can be outline as follow:

Ø    It provides a  record which is essential for the proper conduct of business.

Ø The existence of reliable financial records helps in management decision making

Ø Good book-keeping practice enables one to ascertain the profit or loss made during a trading period.

Ø Proper records keeping makes it possible to find out how a business stands in relations to its customers.

Ø It facilitates reference making 

Ø It shows purchase and sale made within a given period.

Ø It facilitates inter4-firm comparison.
  
 Finally accounting is the language of business and for any business to succeed it has to understand the language accounting.

As a student of accounting, it will enable you to have adequate knowledge of financial matters.

If you choose it as a career and  qualified, you will get a good job and livea comfortable like any other professional..

1.8 History of Accounting Profession

There is no precise time as it is which account started. But record keeping date back as back as 4000 BC. The method of keeping records then was to make marks at the wall or store to indicate the number of things.The modern book-keeping and accounting may be trace to 1494 when Italian mathematicians Rev Father Luc Pacioli developed the present. Double entry system He described as Italian method in the famous treatise symma De.

Arithmetical Geometrical proportion or proportionally in 1494 in vernke, Rev. Father Luca-Paciolii described the double entry system by giving insight into the reasoning behind accounting records. He postulated that all entries must have double entry one a debtor and one a creditor. Even though during the period the records were prepared to show statement for the business rather than the owner. The yearly presentation was still lacking. A Dutchman advocated the profit and loss account of yearly inteval. The level of civilization and technology advancement help in the development of modern method of accounting.    

During the industrial revolution there was need for sophisticated accounting method. Many  professional bodies were formed e.g. ICA Scotland in 1954, ICA  England

    and Wale in 1880, and Association of Public Accountant            USA  in 1887. With the development of new methods, ownership was separated from management. Since the discovery of double entry principle, there has been tremendous development in accounting principles and methods. The introduction of Micro and Mini Computers   enhanced performance but the principle remained the same.

In Nigeria, record keeping has antecedents in ancient kingdoms and empires then there was the periodic contribution which was recorded on wall. But the granting of Royal charter to Royal Niger Company was the turning point in record keeping. The governing accounting principles in Nigeria was almost the same as the one in Britain

In 1965 the Institute of Chartered Accountant of Nigeria was established and affiliated to Profession institute of Britain and USA.  Many Nigerians came back as professional Accountant and became members. The institute was charge with the responsibilities of regulating accounting procedures and practice in Nigeria.  In1992 another Body known as Association of National Accountants of Nigeria was also established.

In 1982 the Nigeria Accounting Standard Board was born to set standard to guide accounting operations. Members include Central Bank of Nigeria, Ministry of Commerce, Nigeria Accounting Teachers Association etc.

 In Nigeria now, there are two indigenous accounting bodies namely Institute of Chartered Accountants of Nigeria (ICAN) and Association of National Accountant s of Nigeria (ANAN) They  prepares and conduct examinations for students who want to qualify and practice as Chartered Accountant in Nigeria.

^{Ref: Essential Financial Accounting by O.A. Longe & R.A. Kazeem}