Financial accounting, commonly known in daily verbatim as ‘book keeping’, is one of the oldest practices integral of business management. Financial accounting is officially dated to the medieval ages when one of the first banking houses and groups gained importance towards the public and in commercial fields. The first bankers wanted an organised approach towards maintaining set references that would act as formally laid records for them, to be referred in the future or present, and were meant to keep in touch of the financial situation of the business. However, historically accounting methods go back to ancient times when prestigious records were required to be maintained.
Financial accounting is so important that nearly every management institute in the world compulsorily trains its students about it, teaching core principles and why it is important to develop a record keeping habit not just in the industry but personally as well. When seen from a personal point of view too, financial accounting can lend much support to one’s own finances. In our modern times, we see a number of apps and software on mobiles and computers specifically intended to maintain a record of our personal record. In its conceptual entirety, maintaining personal finances itself constitutes one of the practical forms of financial accounting.
In today’s world, no business can exist without a set of accounting system. A start-up with just four employees too needs an accountant for the manager to be in touch with the situation of his/her organisation. With finances and the economy becoming so dynamic as seen never before, it is thus an essential part on understanding accounting practices and why they constitute an important part of business management.
However, accounting theory is no one-page study; it requires much skills and know-how about all its concepts and definitions for anyone to be called as a qualified accountant. In this book, a brief explanation of accounting concepts is concerned, with special emphasis on its history and key concepts. Since accounting is more than just merely forming a table with figures, a detailed explanation of all the basic and key terms becomes vital. Through examples, an appropriate understanding of accounting theory becomes even clearer for the amateurs and those who would want to know more about financial accounting without going much into technical details. Finally, conclusion remarks will briefly outline the necessity of maintaining financial records and how accounting theory is yet another still-evolving concept. Since financial accounting encompasses almost everything related to business management, its importance in the corporate world as well as our personal lives will also be outlined through practical examples and theory.