ACCOUNTING AND BOOKKEEPING

CHAPTER I

INTRODUCTION

A.      Background

14th Century, the history of accounting dates back to ancient civilisations, however the birth of double-entry bookkeeping in the 14th century is seen as being the beginning of the modern accounting period.

The Renaissance period in Italy (14th to 16th century) saw many major developments in accounting practice. At this time, Arabic numerals were first used to keep records of business transactions in place of Roman numerals, and record keeping developed on a large scale. In 1494 Luca Pacioli, a Franciscan friar, published the Summa de Artihmetica, Geometria, Proportioni et Proportionalita.

In it were 36 chapters on bookkeeping in which Pacioli described double-entry bookkeeping and other commerce-related concepts. Double entry bookkeeping is a system in which a debit and credit entry is entered for each transaction : “Every debit has its credit – every amount that is charged to on account must be placed to the credit of another”.

Although Pacioli did not invent double-entry bookkeeping, he is credited with being the first person to widely disseminate this knowledge, and the principles published in his Summa remain largely unchanged to this day. Developments that came later included the splitting of records into different books “suited to the nature of the business carried on, each [book] containing such transactions as exclusively apply to its title”, for example cash books for recording money received and payed, and invoice books for recording goods purchased and sold. Variations in bookkeeping also developed between different industries & professions (e.g. Shipping, newspapers and printing).

B.       Problem Formulation

1. What is the Accounting and Bookkeeping ?

2. What are the functions of Accounting and Bookkeeping ?

3. What are the benefits of Accounting and Bookkeeping ?

C.      Purpose

1. To learn about Accounting and Bookkeeping.

2. Knowing the functions of Accounting and Bookkeeping.

3. Knowing the benefits of Accounting and Bookkeeping.

CHAPTER II

DISCUSSION

A. READING SECTION

1. About Accounting and Bookkeeping

ACCOUNTING AND BOOKKEEPPING

Accounting and Bookkeepping, the process of identifying, measuring, recording, and communicating ecomonic information about an organization or other entity, in order to permit informed judgments by users of the information. Bookkeeping encompasses the record-keeping aspect of accounting and therefore provides much of the data to which accounting principles are applied in the preparation of financial statement and other financial information.

Bookkeeping and record-keeping methods, created in response to the development of trade and commerce, are preserved from ancient and medieval sources. Double-entry bookkeeping began in the commercial city-states of medieval Italy and was well developed by the time of the earliest preserved double-entry books, from 1340 in Genoa.

The first published accounting work was written in 1494 by the Venetian monk Luca Pacioli. Although it disseminated rather than created knowledge about double-entry bookkeeping, Pacioli’s work summarized principles that have remained essentially unchanged. Additional accounting works were published during the 16^th century in Italian, German, Dutch, French, ang English, and these works included early formulation of the concepts of assets, liabilities, and income.

The Industrial Revolution created a need for accounting techniques that were adequate to handle mechanization, factory-manufacturing operations, and the mass production of goods and service. With the emergence in the mid-19^th century of large, publicly held bisiness corporations, owner by absentee stockholders and administered by professional managers, the role of accounting was further redefined.

Bookkeeping, which is a vital part of all accounting systems, was in the mid-20^th century increasingly carried out by machines. The widespread use of computer broadened the scope of  bookkeeping, and the term data processing now frequently encompasses bookkeeping.

2. Functions Of Accounting and Bookkeeping

2.1 Functions Of Accounting

1. Recording:

This is the basic function of accounting. It is essentially concerned with not only ensuring that all business transactions of financial character are in fact recorded but also that they are recorded in an orderly manner. Recording is done in the book "Journal".

2. Classifying:

Classification is concerned with the systematic analysis of the recorded data, with a view to group transactions or entries of one nature at one place. The work of classification is done in the book termed as "Ledger".

3. Summarizing:

This involves presenting the classified data in a manner which is understandable and useful to the internal as well as external end-users of accounting statements. This process leads to the preparation of the following statements: (1) Trial Balance, (2) Income statement (3) Balance sheet.

4. Analysis and Interprets:

This is the final function of accounting. The recorded financial data is analyzed and interpreted in a manner that the end-users can make a meaningful judgment about the financial condition and profitability of the business operations. The data is also used for preparing the future plan and framing of policies for executing such plans.

5. Communicate:

The accounting information after being meaningfully analyzed and interpreted has to be communicated in a proper form and manner to the proper person. This is done through preparation and distribution of accounting reports, which include besides the usual income statement and the balance sheet, additional information in the form of accounting ratios, graphs, diagrams, funds flow statements etc.

2.2 Functions of Bookkeeping

1.      Maintaining descriptive, company-specific data in a Company Data File (General company information).

2.      Maintaining a Chart of Accounts (Detailed data on Current and Prior years transactions and a Current Budget).

3.      Performing Banking tasks (Manage Checking and Deposits, Reconcile Bank Accounts, Print Journals).

4.      Maintaining easily searched transaction data bases.

5.      Preparing financial statements and other reports (Income Statements, Balance Sheets, Transaction Detail Reports).

3. Benefits of Accounting and Bookkeeping

3.1 Benefits Of Accounting

Accounting equipped with techniqus for collecting and prefered to link economic data into a variety of forms f enterprises, both individuals and institutions. 

1.      Know the status and financial condition of the company as well as how likely the future (for owners and potential investors).

2.      Determining the tax base and the rules ( for goverment  agencies).

3.      Determine the level of risk associated with the loans or credits will be given (for bankers and creditor).

4.      Get a picture of stability and the rate of profit of the company (for workers and trade union representative).

3.2 Benefit Of Bookkeeping

 Good bookkeeping will mean you can easily track the cash collected against sales invoices you have raised. Collecting cash is essential to protect the liquidity in a business.

Regular bookkeeping will allow you to see if there is any information missing by setting aside time each week or month to summarise your bank transactions you will know if you have received all your bank statements or not.

By carefully looking at your payments you can be sure that you aren’t regularly over paying any of your suppliers.

B. VOCABULARY BUILDING SECTIONS

Topic : Countries, Nationalities, Language

Intruction : Fill the blanks with suitable countries, nationalities and language

NO	COUNTRY	NATIONALY	LANGUAGE
1	Germany	German	German
2	France	French	French
3	Italy	Italian	Italian
4	Spain	Spanish	Spanish
5	England	British	English
6	Japan	Japanene	Japanese
7	Australia	Australian	English
8	USA	American	English
9	Egypt	Egyptian	Arabic
10	Greece	Greek	Greek
11	Netherlands	Dutch	Dutch
12	Saudi Arabia	Saudi	Arabic
13	Indonesia	Indonesian	Indonesia
14	Malaysia	Malaysian	Malay
15	China	Chinese	Chinese

2. Complete These Sentence

1. Bangkok is the capital of Thailand

2. Buenos Aires is the capital of Argentina

3. Ankara is the capital of Turkey

4. Soul is the capital of Korea, South

5. Riyadh is the capital of Saudi Arabia

6. Cairo is the capital of Egypt

7. Athens is the capital of Greece

8. Lisbon is the capital of Portugal

9. Tel Aviv is the capital of Israel

10. Stockholm is the capital of Sweden 

Exercise 3: write sentence from the words in brackets ( ). All the sentence are present.

1.  ( this room / clean / every day)

• This room is cleaned every day.

2.  ( how often / the room / clean?)

• How often is the room pleaned?

3.   (glass / make / from sand) Glass

• Glass is made from sand.

4.   ( stamps / sell / in a post office)

• Stamps are sold in a post office.

5.   ( football / play / in most countries)

• Football is played in most country.

6.   ( this machine / not / use / very often)

• This machine is not used very often.

7.   (what language / speak / in Ethiopia?)

• What language is spoken  in Ethiopia?

8.   (what / this machine / use / for?)

• What is this machine used for?

Exercise 4: write sentence from the word in brackets ( ). All sentences are past.

1.      (the room / clean / yesterday)

·         The room was cleaned yesterday

2.       (when / the room / clean?)

·         When was the room cleaned?

3.       (this room / paint / last month) This room

·         This room was painted last month.

4.       (these houses / build / about 50 years ago)

·         These houses were built about 50 years ago.

5.       (Ann’s bicycle / steal / last week)

·         Ann’s bicycle was stolen last week.

Exercise 5: complete sentence. Use the passive (present or past) of these word:

Blow   build   clean   damage   find   invent   make   make   pay   show   speak   steal

1.      The room is cleaned every day.

2.      Two trees were blown down in the storm last night.

3.      Paper is made from wood

4.      Is this a very old film? Yes, it was shown in 1949

5.      My car was stolen last week. The next day it was found by the police.

C. GRAMMAR FOCUS

Passive Voice

In a passive sentence, the object of an active verbs becomes the subject of the passive verbs (verbs that are followed by an object) are used in the passive. The form of passive is be + Past participle.

Use of Passive

Passive voice is used when the focus is on the action. It is not important or not known, however, who or what is performing the action.

Example: My bike was stolen.

In the example above, the focus is on the fact that my bike was stolen. I do not know, however, who did it.

Sometimes a statement in passive is more polite than active voice, as the following example shows:

Example: A mistake was made.

In this case, I focus on the fact that a mistake was made, but I do not blame anyone (e.g. You have made a mistake.).

Form of Passive

Subject + finite form of to be + Past Participle (3rd column of irregular verbs)

Example: A letter was written.

When rewriting active sentences in passive voice, note the following:

• the object of the active sentence becomes the subject of the passive sentence
• the finite form of the verb is changed (to be + past participle)
• the subject of the active sentence becomes the object of the passive sentence (or is dropped)

Examples of Passive

Tense		Subject	Verb	Object
Simple Present	Active:	Rita	writes	a letter.
	Passive:	A letter	is written	by Rita.
Simple Past	Active:	Rita	wrote	a letter.
	Passive:	A letter	was written	by Rita.
Present Perfect	Active:	Rita	has written	a letter.
	Passive:	A letter	has been written	by Rita.
Future	Active:	Rita	will write	a letter.
	Passive:	A letter	will be written	by Rita.

 

Tense		Subject	Verb	Object
Present Progressive	Active:	Rita	is writing	a letter.
	Passive:	A letter	is being written	by Rita.
Past Progressive	Active:	Rita	was writing	a letter.
	Passive:	A letter	was being written	by Rita.
Past Perfect	Active:	Rita	had written	a letter.
	Passive:	A letter	had been written	by Rita.

 Be Going to          Active:      Rita               is going to write                 a letter

                               Passive:    A letter          is going to be written         by Rita.

Passive Sentences with Two Objects

    Rewriting an active sentence with two objects in passive voice means that one of the two objects becomes the subject, the other one remains an object. Which object to transform into a subject depends on what you want to put the focus on.

	Subject	Verb	Object 1	Object 2
Active:	Rita	wrote	a letter	to me.
Passive:	A letter	was written	to me	by Rita.
Passive:	I	was written	a letter	by Rita.

.

As you can see in the examples, adding by Rita does not sound very elegant. That’s why it is usually dropped.

Personal and Impersonal Passive

Personal Passive simply means that the object of the active sentence becomes the subject of the passive sentence. So every verb that needs an object (transitive verb) can form a personal passive.

Example: They build houses. – Houses are built.

Verbs without an object (intransitive verb) normally cannot form a personal passive sentence (as there is no object that can become the subject of the passive sentence). If you want to use an intransitive verb in passive voice, you need an impersonal construction – therefore this passive is called Impersonal Passive.

Example: he says – it is said

Impersonal Passive is not as common in English as in some other languages (e.g. German, Latin). In English, Impersonal Passive is only possible with verbs of perception (e. g. say, think, know).

Example: They say that women live longer than men. – It is said that women live longer than men.

Although Impersonal Passive is possible here, Personal Passive is more common.

Example: They say that women live longer than men. – Women are said to live longer than men.

The subject of the subordinate clause (women) goes to the beginning of the sentence; the verb of perception is put into passive voice. The rest of the sentence is added using an infinitive construction with 'to' (certain auxiliary verbs and that are dropped).

Sometimes the term Personal Passive is used in English lessons if the indirect object of an active sentence is to become the subject of the passive sentence.

D. GRAMMAR EXERCISES

Exercise 1:  Change the active to the passive by supplying the correct form of be.

1. Tom opens the door.                           The door is opened by Tom.
2. Tom is opening the door.                    The door is being opened by Tom.
3. Tom has opened the door.                              The door has been opened by Tom.
4. Tom opened the door.                         The door was opened by Tom.
5. Tom was opening the door.                The door was being opened by Tom.
6. Tom had opened the door.                  The door had been opened by Tom.  
7. Tom will open the door.                      The door will be opened by Tom.
8. Tom is going to open the door.           The door is going to be opened by Tom.
9. Tom will have opened the door           The door will be have opened by Tom.

Exercise 2: change the active to the passive.

1.                  Shakespeare wrote  that play.            

·         That play was written by shakespeare

2.                  Bill will invite Ann to the party.     

·         Ann to the party will be invited by Bill.

3.                  Alex is preparing that report

·         That report is being prepared by Alex

4.                  Waitresses and waiters serve customers.

·         Customers is served by Waitresses and Waiters

5.                  The teacher is going to explain the lesson.

·         The lesson is going to be is explainned by The teacher.

6.                  Shirley has suggested a new idea.

·         A new idea has been suggested by shirley.

7.                  Two horses were pulling the farmer’s wagon

·         The  farmer’s wagon were pulled by two horses.

8.                  Kathy had returned the book to the library.

·         The book two the library had been returned by katty.

9.                  By this time tomorrow, the pasidendt wiil have made the announcement.

·         The announcement will be have made this time tomorrow by the president.

10.               I didn’t write that note. Jime wrote it.

·         That note didn’t written by me. it was written by jime.

CHAPTER III

CLOSING

A.      Conclusion

Accounting and Bookkeepping, the process of identifying, measuring, recording, and communicating ecomonic information about an organization or other entity, in order to permit informed judgments by users of the information.

Bookkeeping, which is a vital part of all accounting systems, was in the mid-20^th century increasingly carried out by machines. The widespread use of computer broadened the scope of  bookkeeping, and the term data processing now frequently encompasses bookkeeping.

Passive voice is used when the focus is on the action. It is not important or not known, however, who or what is performing the action. In a passive sentence, the object of an active verbs becomes the subject of the passive verbs (verbs that are followed by an object) are used in the passive. The form of passive is be + Past participle.

B.       Advice

Discussion of Accounting and Bookkeeping and Passive Voice, should be studied seriously and the authors hope that can be used as a reference to add depth of knowledge.