Researchers consider that accounting theory is an important aspect of accounting deficiencies, and some consider it an important feature that increases its flexibility and its ability to evolve continuously, as accounting has built its own theory.
But what is taken on accounting and unlike most of its peers from other social sciences, is delayed in completing the theoretical framework of its professional practice. Since Luca Patchouli put the first block in its theoretical structure when he introduced the world to the known system Double entry systemOver the course of more than four centuries, accountants have devoted their attention to the development of purely procedural methods and rules that are necessary to implement this system. It is clear that what Pacholo presented was a gift that he could through this principle The principle of double entry That gives a new concept of accounting and a big step change in this area.
Accounting studies proved that the first attempt by man to record financial information, dating back to the era of the Assyrians in about 3500 BC, as their kings were keen to record what they were paying for their salaries in the form of cattle or grain, or precious stones, as some excavations in the ruins of Babylon Remnants of what looked like accounting records were in the form of brick slabs, as well as the Hammurabi canons that appeared on the Tower of Babel also included in its articles two articles (104,105) relating to commercial provisions. According to the information reached by researchers in the history of accounting, the most sophisticated old accounting systems is the system used by the Greeks in Athens, and this system attributes the first account of government payments.
In terms of counting methods, man knew during this stage primitive methods also passed through a long stage of development, was crossed on the numbers using symbols such as the hand symbol for the number 5 and the symbol of the hands together for the number 10, as human inquiries held the threads to denote the bug numbers.
During this historic era, specifically during the reign of the Greek and Roman empires, accounting took a major step forward thanks to two factors:
The first factor: the beginning of the use of the currency unit as a means of commercial transactions starting from the sixth century BC, which provided an important corner of the accounting system.
The second factor was represented by the emergence of some relatively advanced numerical systems, which began with the Greek numerical system and then the Roman numerical system and finally the Indian-Arab numerical system, where the transfer of the Arabs to this latter system to Europe is a great service of accounting, which was later devoted to the discovery of double entry in Italy.
Until the beginning of the thirteenth century, accounting records were rudimentary (memoirs) in which traders and money lenders established their future financial transactions with third parties in order to demonstrate the rights and obligations arising from such transactions. As for cash transactions, traders were subject to the personal guild without registering them. This method of recording transactions was termed (single entry). The records of FLORENTINE bank are the first accounting records organized on the basis of single entry.
But at the beginning of the fourteenth century AD there were two important developments in the world of trade, which left significant effects on the accounting function.
The first is the increase in forward transactions in commercial transactions to the extent that their requirements no longer accommodate single entry.
Second, the expansion of European trade, which made financial transactions a double impact can not be accounted for by the single registration, where the latter is based on unilateral registration, ie there is no debtor party and a creditor party and this is a disadvantage of the single registration. Therefore, accounting had to evolve in response to the new circumstances, and thus the seeds of double entry in the accounting systems grew some of the leading projects during this historical era,
Meaning of double entry
It is a proof of a commercial operation that has two parties: one is a debtor and the other is a creditor.
The debtor party is the one who takes or increases his liability as much as he takes
The creditor is the one who gives or decreases his discharge as much as he has been given
The limitation was: from H / Bank to H / Customer
This means that the bank's balance has increased as much as the customer paid
At the same time, the customer's liabilities decreased as much as he paid to the bank
The creation of the double entry represents a decisive reversal in the world of accounting, and although the roots of this concept date back to the end of the fourteenth century, the mention of double entry in accounting thought is always associated with the Italian Luca Paciolo who lived in the second half of the century. Fifteenth.
Pachuoli worked at the University of Milan, then at the Academy of Rome, and in 1494 he wrote a thesis in mathematics. In this thesis, Pacholo devoted a whole chapter on the art of bookkeeping and accounting records, explaining in detail the concept of double entry. He had openly admitted in the introduction to his thesis that he had no merit in inventing double entry. He had done most of what he had done to explain methods that had been known before, but no matter how different the researchers assessed the effects of Pachalo on accounting, they agreed to assign him credit in two types. Two effects are:
- He was the first to develop the main pillars of the organization of the accounting book group represented in three key records identified in: note, journal, ledger.
- It was also the first to be invited to measure the project's profit at the end of the financial period by preparing the so-called profit and loss account.
The double entry can be considered the second major benefit that mathematics offers to accounting.
Double entry rule
The accounting record is two parties (debtor / creditor), through the financial movement derives the data of the entry and determine the nature of the movement and then the parties of the relationship from the debtor account and the credit account and thus record the movement.
An accounting entry is a recording of a financial transaction in a manner that shows the amount of the transaction, the date, the statement and the account to which the transaction is due, whether debtor or creditor.
Each financial transaction has two parties. One party is called a debtor and one gives a creditor
Each financial transaction has two parties that are equal in value and different in direction. That is, two equal sides are “debtor” and “creditor”.
The accounting form of the accounting process is as follows:
From the receiving party (debtor)
To the party / creditor
A summary of the accounting entry and the parties will address the following
1- Accounts receivable “city by nature”
Assets and expenses
2. Accounts payable by nature
Thus, any increase in the debit account by nature places it in the debtor party to the record and any shortfall in the debit party.
Also for the credit account, any increase in its nature makes it creditor and any shortage puts it on the debtor side.
The financial transaction shall be recorded in the entry according to proven documents proving the entitlement of the registration of the movement such as a cash exchange authorization, a cash receipt, a purchase invoice, a sales invoice, a check payment, a check receipt or a payment order for the operation or production of the warehouse…. etc.
A simple example of cash disbursement from the company's treasury
- A registration is required to disburse the amount of 12000 pounds to the supplier (s).
The parties /
1 - Treasury of the company (Fund) This account within the assets and therefore the nature of the debtor and then the shortfall due to the disbursement process makes him a creditor in the entry.
2 - Supplier (o) This account falls within the accounts of suppliers, which represents a liability on the company and therefore the nature of the account creditor and the increase resulting from the process of disbursement (repayment) makes him owed.
The above is a registration of the financial movement of the registration and directing the amount to the parties to the registration, each according to its nature and the nature of the transaction that took place. The most important is to know the amount of the amount of the account according to your understanding and learning about the nature of the account and the nature of the movement that took place on it.
Use of calculation software
It is worth mentioning that most companies now use accounting software to record accounting movements, and thus save a lot of effort on accountants, where the accountant enters the accounting movement from the screen dedicated to the movement and what he never is to choose the accounts that will be affected by the movement and the program creates Restrictions are automatically shown as below.
What is the accounting entry?
It is an exchange of the value of any taking and giving money or What Equal money between the two sides of the financial process. … Constraint Dual way to record entries Accounting , Keep in mind that each process has two parties first and we call the party (creditor) of the value, and the second he is Party (debtor) for this value
What are accounts receivable and payables?
Accounts Of nature City Increases at the right (debtor) and decreases at the left (creditor) like assets, while Accounts Of nature CreditorIncreases in the left (creditor) and decreases in the right (debtor) such as liabilities and equity. … Fund account Is from accounts Assets of natureCity Which increase in the debtor party and decrease in the creditor party.
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