The development of financial accounting

As we all known, the system of financial accounting is getting more and more perfect because of the emergency of a great amount of the financial transaction . Generally speaking, the developed speriod of accounting can divide three parts:Ancient Accounting, Contemporary Accounting and Morden Accounting. Accounting gets a better growth with the development of the world and science and technology after we step into the 21th century. Ancient Accounting About 1000BC,financial accounting had been created . Accounting, as a way to record expenses and receipts,has exsited for a long time . In the ancient time, most of the people can support their own life by cultivating. In other words,there will be much less financial transaction emerging. Therefore, they will use simple way to record food, clothes or the other sources left, such as, using knotted strings of different length and colours or engraving on stones etc. This king of method is fit with economical situation which is called “Self Sufficient Natural Economy Although accounting in the early stage is briefly, it experience a long time trasition which is from simple to complex , elementary to senior . Contemporary Accounting 1.1The rise of Italy at the Middle Age The outbreak of the Renaissance advanced the rise of Italy sharply. Luca Pacioli first described the practice and theory that had developed in commercial cities in Italy. Pacioli explained the opening inventory and he wrote three things needed by one who wished to carry on business diligently. We think that the beginning of the symbol of the Contemporary accounting in his work. 1.2East India Company After that, the emergency of East India Company boost a new system accounting appearing. East India Company did not have enough cash to pay the dividend payment after voyaging,so ,they promised to their shareholders that they will use the interest next navigation to replace the cash they owed. We can see that the share is balanced at the end of the year instead of every adventure activities . From this , the concept about continuous operation and accounting period appeared.Meanwhile, stock company emerged. At the same time, there are many events happening all over the world to promote the changing of the capitalism economy.Such as ,the early Bourgeois Revolution(including the British Revolution , French Revolution and American Revolution) and movement of enlightenment originated in France in the second half of the 18th century , which spread the free minds from prejudice , unexamined authority and oppression by church or state. 1.3The British Industrial Revolution Besides, a great amount of asset through a series of Colonial Expansion activities done by East India Company has been accumulste. It provide a chance to advance The British Revoluton. During this time ,a big amount of production was produced,which leads the concept about depreciation tends to be important.Due to overall scale of the enterprise was expanding and transaction activities is more and more complex ,which makes the information needed about cost of production increasing, and then, cost accounting borned. At the same time, the great amount of capital cause owernership-management separation. If we assume the cost accounting is a new-borned baby,so the Industrial Revolution and stock company is its parents. 1.4South Sea Co Bubble Events In the past, the main method is accounting keeping and balancing. But now, we need to audit. South Sea Co Bubble Events caused a sensation because of undetailed recording, and it exsited fraud masquerades seriously.So the curtain of audit is lift. Morden Accounting 2.1 1929-1933 Economical Crisis When we step into the 20th ,the era of industrial era of
Industrial Economy was transiting to the Morden Accounting. At about 1929,the most of developed country broke out Economy Crisis. Many companies could not pay for the huge debt because they sold shares holded on the securities market.The leader of the government and the public thought the main reason to make the capitalism market desolate even to break down is loosing accounting practice . Thus, most of shareholders required strongly that it is necessary to let accounting report to reflect the true situation of the company clearly. So, 《Securities Acts》was pulished by American government and it draw up a series of the rule of law. Whatever 《The Securities Act》 or 《The Securities and Exchange Act》,mentioned that it is very important to strengthen the controlling about the accounting information . All of the quoted company had to provide accurate accounting information similarly unified . Under this situation, the Parliament established SEC and require it to formulate consolidate the rules of accounting. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information. 2.2The tide of knowledge economy 1991,America walked out of trough,the economical situation has sustained an stable growth for 10 years. An article was put forword the American commercial magazine. And a new concept called New Economy was raised. The new economy is commonly believed to have started in the late 1990s, as high tech tools, such as the internet, and increasingly powerful computers, began penetrating the consumer and business marketplace. The thought that a "new economy" had arrived was evident in the hysteria surrounding the tech-bubble of the late '90s and early 2000s. Without fully considering macroeconomic factors, investors and financial institutions bid up stock prices to unprecedented highs. Although the tech bubble has long since burst, the remaining firms have remained very innovative and at the forefront of technology.

Companies in the new economy are heavily involved in the internet and biotech industries, but the ripple effects of new technologies has spread out to all other industries as well. Under the situation which economical activities is more complex, production increasing socialization and social relations more widely. The position , function , target and principle tends to be perfect.It is taking shape its own system and theory gradually.Besides,the promotion of science and technology is boosting the provement of accounting. Although the future of development of accounting is bright , yet it is facing many unpredicted challenge.For example,the International Economical Crisis happened in 2008. Since we step into 21th century,the IT technology is developing sharply. The coming stage is a new economical age that is globalization, informatization and networking.It needs us to give play to the function of accounting fully, and adjust whatever practice or theory of accounting to adapt the challenge.

Explanation of two key statement Comprehensive Income Comprehensive Income is to reflect that the change in a company’s net assets from nonowner sources over a specified period of time .It is a specific term used in companies financial reporting from the company-whole point of view.Generally speaking , the people who are external to the company or who have few knowledge of what is going on in the firm can gain many useful information from comprehensive income to help them decide when is the best moment to run their own business.

Investors : investors can learn the revenues and expenses are reduced from comprehensive,debt is declining from financial position.

Employees : the company operating normally, can normal payment and to provide more employment opportunities.

Financial Position The purpose of the financial position is to report the financial position (amount of assets, liabilities, and stockholders' equity) of an accounting entity at a specially appionted point on time. We can learn a great deal about what the financial position reports just by reading the statement from the top.

Commonly, a statement of financial position will be printed at the end of every month. Looking up past months can provide information about how a company's finances are carring out, and these documents can also be compared with statements from the same month in bypast years. A balancesheetanalysis is typically much more specific.

Classified Users : conduct a ratio analysis to discover the company's true financial position.

Prospective Investors : investors must be careful in their analysis of the information derived from the documents to estimate the profitability of a company .

Customers : the company’s normal operation,the debt ratio in the lower, to enhance product quality.

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