ॐ श्री सरस्वत्यै नमः

We all know this subject very well from our childhood. Remember those days of childhood when we share toffee and chocolates with your brother, sister and friends; we use to either keep more or give less, which means we hate to get less. Consider this less as LOSS. 

Then we grew up a little bit when parents started to give us pocket money, and our relatives gave us lifafa. Forget those lifafa as our parents use to keep those lifafas always. So what remains with us in only the pocket money provided by our parents and we use to give them "hisab". That where and how much we had spent. This hisab is the accounts which we use to write in a paper or a diary. 

In this subject, we will learn to keep the more FORMAL hisab with some fancy words or terms. That is all. Being honest with you friends, you don't need a tutor for this subject. You know this subject very well.

All the best for your brightest future friends!

History of Accounting : 

Before knowing the history of accounting, let us know about the history of money which is the basis of the accounting process.

Money : 

Item or verifiable record accepted for payment of goods and services, repayment of debts, taxes etc.,

No one sure about the information regards money, but METAL is used as money in early 5000 B.C.

Barter system : 

In Ancient times Mediaeval European used tally sticks as evidence for remembering debts.

The barter system is an exchange of goods directly for goods and services.

The barter system is not delayed in time.

• Bilateral basis ( 2 Members)
• Multilateral basis( 2 or More members including 3rd party).

Bilateral basis : 

Eg. Alice exchange apple 🍎 to John exchange 🍊 orange.

Multilateral basis : 

Eg.Alice exchange apple 🍎 to John exchange orange 🍊 to Charles exchange 🍐 pear to Alice.

 Later in the year 600 to 650 B.C. 

LYDIAN KINGDOM of Western Asian culture is known to be the IRON AGE KINGDOM are the first to make coins.

They are originators of GOLD and SILVER COINS. Other countries to start their specified value coins.

MONEY ORIGIN 💰:

In the year of 1000 B.C - 400 A.D. standardised coins had been established in 7 th century.

Later in 11th century, some empires and dynasty's period silver coins are used for the transaction held.

Indian sub-continent - SHER SHAH SURI (1540 - 1545).

During this empire, period introduced silver coins called RUPIAH weighing 178 gms, and it is used and continued in MUGHAL EMPIRE 13 th century

Paper money is well known in Europe through Accounting traveller's as MORCOPOLO and WILLIAM OF RUBRUCK ( Explorers) from middle east and central Asia.

For a large sum of money used for long-distance of transporting transaction. Money traders start using promissory notes, which is the basis for traders to start using banknotes. Promissory notes predecessor to regular Banknotes.

During 18th and a quarter of 19th century Bills of exchange is used and essential before the raising of Banknotes.

• Demand deposits
• Documents
• Paper notes
• Digital currency.

Account:

In 1300 " Counting", " reckoning", of money transaction (action of process of calculating or estimating something).

Calculation in Latin word as Computer means to count or sum up.

Father of Modern Accounting :

LUCA PACIOLI - 1494

History of Accounting and Accountancy can be traced 1000 years old in ancient civilizations.

Early development of Accounting dates back in Mesopotamian age closely related to developments in writing or counting or money to access the detail report of financial information.

Many parts of the world Accounting can be used widely for the recording of goods and services related activities are evidence seen in the Egyptians and Babylonians period.

Mesopotamian used primitive accounting methods for keeping records that detailed transaction involving domesticated agriculture setting (Animal's, livestock, crops commodities such as MEAT, FUR, MILK, EGGS,  LEATHER and WOOL).

In India, philosopher and economist CHANAKYA wrote ARTHSHASTRA BOOK in 2nd century B.C. It contains details and advice on how to maintain record books of accounts.

Origin of Accounting: 

• Accounting is an act of keeping lists of all debits and all credits.
• It is a language of business of all finance.
• It can translate the complexities of finance into information where the public can understand.
• It roots from ancient civilizations.

Bookkeepers : 

They emerged during the period of the Barter system. They classified the records under CASH ECONOMY and COMMERCE ECONOMY.

They kept transaction in Individual ledgers for the proof if dispute raises, a matter brought before a magistrate.

New and improved ledgers :

During currencies became very important and available TRADESMEN and MERCHANTS began bookkeeping for build material and wealth. Also, to know what they owed and who owed debts to them.

In Until 1400s single column information has been maintained.

Eg. Sale of three chickens Rs.48/-

       Sale of seeds Rs.900/-

       Bought goods Rs.200/-

It will be time-consuming and inefficient in tallying method.

The Mathematical Monk :

During 15th century Italian monk LUCA PACIOLI structured and laid the groundwork of modern accounting. He Published the book     " SUMMA DE ARTHIMERTICA" in 1494, shows benefits of Double entry system. It is the simplest form of maintaining separate debits and credits providing a clear picture of the company and overall strength. The general public has no access to such records.

Eg. Sale of three chickens Rs.48/-

              Debit cash Rs.48/-

               Credit chicken Rs.48/-

Sale of seeds Rs.900/-

            Debit cash Rs.900 /-

            Credit seeds Rs.900/-

It gives awareness of the financial health of the company.

Financial statements :

Prepared to attract INVESTORS, CORPORATIONS, SHAREHOLDERS.

Income statement and cash flow statement documents were proof of companies profit-making abilities.

It stimulating operations and profits for making a complete study of trusting and it's management.

Birth of Accounting profession : 

Accountants are made essential for attracting investors to maintaining investors confidence. Hence, the Accounting profession was recognised in 1896 and title established of CPA ( certified public accountant).

Accounting today : 

Using a large number of tools for calculating receipts and payments for quickly reconciling books and technology has brought Accounting software as quick books show job faster and more accurate information with less time-consuming.

Accruals in Accounting are the expenses or revenues that have been recorded by the firm but not yet realised. In simple terms, they are the financial transactions already estimated in the current accounting cycle and payment for which is done in the future.

Let’s look at a few practical accrual accounting examples.

Example 1: Salaries Payable

On 31 December 2020 salary for December amounting, Rs 20,000 to be paid in January 2021 shall be recorded as under. Salary account shall be debited (accounting rule: debit all expenses), while salary payable account will be credited (Liability created).

Example 2: Rent Receivable

On 31 December 2020 rent for December amounting Rs 20,000 to be collected in January 2021 shall be recorded as under. Rent Receivable account shall be debited (Asset created: to be received), while Rent Income account will be credited (accounting rule: all income and gains should be credited).

EQUITY SHARES VS PREFERENCE SHARES

1. PREFERENCE OF DIVIDEND: The preference shareholders have the preferential right to dividend over the equity shareholders.

2. PREFERENCE OF CAPITAL PAYMENTS: The preference shareholders have preferential rights on capital payment over equity shareholders. 

3.VOTING RIGHTS: The equity shareholders enjoy the voting rights in the company, whereas the preference shareholders do not get any voting rights, except in cases where their interest is influenced. 

4.REDEEMABLE: Preference share may be redeemed at the will of the company whereas equity shares are redeemed only at the time of winding up of the company. 

5. OWNERSHIP: Equity shareholders are the owners of the company, whereas preference shareholders are not the owners of the company. 

Accounting is part and parcel of our daily life. We are indulging in accounting activities in our everyday life. But we are unaware of it. For example, we go for marketing with say Rs. 1000/-. We buy different items, like fruits, vegetables, grocery items, stationery etc. When we come back home, we segregate all items, keep things in its respective places viz. vegetables in refrigerator, groceries and condiments in the kitchen, toiletries in the bathroom, stationeries in the study room and so on. Suppose we keep items in haphazardly, it would be challenging to trace them out easily and would be very irritative. Therefore, we keep each item on its concerned places. It is what about accountancy. Further, we make a note of each expenditure and summarize them to reach out the total amount spent on every month viz. for education, entertainment, medical, grocery, eating out etc.

The accounting is defined in the manner mentioned ibid. 

Accounting is both an art and science.

It is an art of recording, classifying and summarizing financial transactions in a systematic and significant manner.

We can read it deeply why accounting is an art and science too, why financial transactions are a core part of accountancy and so on.

By division of labour we mean specialisation in work.  Under it the worker specialises either in the prouduction of a single commodity or single sub-process . It is a system whereby the operations necessary to make a finished product are so minutely divided that each worker performs one or at the most only a few operations. 

Types of division of labour: 

1 . Product based division of labour: When a worker specializes in the production of a particular commodity or service, it is called product based division of labour. 

2. Process Based division of labour:  in a modern economy, production of a good or service involves several processes and each worker specializes vin one or two processes. This type of division of labour is known as process based or complex division of labour. 

3. Geographical division of labour: Sometimes due to some reasons, the production of certain goods takes place in a particular place, state, or country This type of division of labour is called geographical division of labour. 

Factors of Production (FOP) 

Production of goods & services requires the use of certain resources. For eg : to produce whearc, a farmer needs land, labour, seeds, fertilizer, etc. So in this example land, labour, seeds and fertilizers are the factors of production. 

Characteristics of FOP: 

1. Jointly used in the production of a commodity: No single commodity can produce anything. We will have to combine all the factors together to produce something. 

2. Physical Existence: all the four factors of production have a physical existence. They are tangible resources. 

3. Use of factor services: An important characteristic of factors of production is that it is the services of the factors, rather than the factors itself, that contribute to production. 

4. All the factors are not equally mobile: Labour and entrepreneur are mobile factors of production, as they can be transferred from one place to another. On the other hand land is immobile. 

Classification s of FOP : 

1.Land : land is a basic factor of production, because in every type of productive avtity land is needed. It is also a passive factor because it has to be used by labour and entrepreneur, for producing something. 

2. Labour: Labour means all types of human work, physical and mental, done with a view to earn money. 

3. Capital : all man made durable goods, which are used for further production of wealth are included in capital. Capital is a produced means of production. 

4. Organisation : land, labour, and capital are natural, human and material means of production. No production is possible without bringing these factors of production together and using them in right proportions.  

I am a Commerce student and have heard about a lot of scope in Data Science like Python, SAS etc. Is this good for a commerce student? What all opportunities will be available in the future?