History of Accounting Indicates That Accounting Process Has Evolved

The American Accounting Association defined story asthe work on of identifying, measuring and communicating economic training to have informed judgments and decisions by the users of the schooling (Aryasri, 2008). The history of accounting indicates that accounting branch has evolved throughout the history. Although, identification, measurement and communication still remain as nerve activities of accounting process, the methods of doing them have significantly changed.What was once considered to be acceptable in the past may not be suitable for today as its environment has changed. However, the demand for changes usually comes from the environment rather than accounting trading itself. History has shown that unless thither is a severe demand for changing, the natural drift of accounting profession is to follow the convention. This has been proven by the era of stagnation. During this period, patronage the invention of double entry accounting process and its advantages, co ncernes were redundant to adopt.However, when the industrial revolution took place, there was a great increase in the figure of speech of corporation which demanded further developments in accounting process. Many companies which are unable(p) to adopt the accounting changes have failed badly. Nevertheless, through these failures, the problems in accounting process have been recognized and addressed promptly. For example, the problem of not distinguishing between dandy and revenue and the allocation of asset depreciation to expenses were identified by the collapses of many a(prenominal) railway companies.Accountants were then collectd to distinguish between capital and revenue items, measure the value of fixed assets, and determine depreciation rates (Hooper, Davey, Liyanarachchi & Prescott, 2008).. In the same sense, in todays ever changing business environment, accounting process will face a great potful of challenges and demands, it is certain that accounting process will continue to evolve in order to adapt the changing environment. The implications of paragraph 12 of the New Zealand modeling can be summarized into answers to three interrelated questions belowWhat are pecuniary statements to be prepared? 2. Who are they prepared for? 3. What is the purpose of the pecuniary statements? First, there three types of information the preparers should be able to prepare according to the model 1. information which reflects the financial position of an entity, the balance sheet presents this kind of information 2. information which indicates an entitys financial performance, which normally refers to as an income statement 3. nformation that reflects changes in financial position, cash flow statement provides this kind of information (Deegan, 2009). Secondly, it is as well important for preparers to consider who the users are and identify the potential users. Because different users require different information as they may make different decisions. Howe ver, A wide range of users the simulation here stated, it is defined by framework that include investors, employees, lenders, suppliers and trade creditors, customers, governments and their agencies, and public (Drever, Stanton & McGowan, 2007).Thirdly, it is important to make sure the financial statements have served their primary objective which is the information need of the users. In run along with the decision-usefulness approach adopted by the current New Zealand Framework, when the preparers preparing financial statements they should continuously bear in mind that the financial statements they prepared should provide information that is useful to end-users in making economic decision.This includes providing information to help users to prognosticate what may happen in the future and providing feedback on previous decision. fundament the financial statements prepared by preparer, the users should be able to decide whether past decisions, and the information used to make t hem, were correct, and this can help they to make come apart decision in the future (Deegan, 2009). .