Page 25 - Encyclopedia of Business and Finance

eobf_A 7/5/06 2:54 PM Page 2

Accounting

Luca Bartolomes Pacioli (ca. 1445–ca. 1517). Fra Luca Pacioli’s 1494 publication described the double-entry system of
accounting. © ARCHIVO ICONOGRAFICO, S.A./CORBIS

on Accounting Procedure (CAP); both the APB and CAP be continued until the combined entity reaches the unit
were committees of the American Institute of Certified that is useful for the desired purpose.
Public Accountants (AICPA). Accounting activities may occur within or outside the
organization. Although accounting is usually identified
What type of unit is served by accounting? Probably no with privately owned, profit-seeking entities, its services
concept or idea is more basic to accounting than the also are provided to not-for-profit organizations such as
accounting unit or entity, a term used to identify the universities or hospitals, to governmental organizations,
organization for which the accounting service is to be pro- and to other types of units. The organizations may be
vided and whose accounting or other information is to be small, owner-operated enterprises offering a single prod-
analyzed, accumulated, and reported. The entity can be uct or service, or huge multi-enterprise, international con-
any area, activity, responsibility, or function for which glomerates with thousands of different products and
information would be useful. Thus, an entity is estab- services. The not-for-profit, governmental, or other units
lished to provide the needed focus of attention. The infor- may be local, national, or international; they may be small
mation about one entity can be consolidated with that of or very large; they may even be entire nations, as in
a part or all of another, and this combination process can national income accounting. Since not-for-profit and

2 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION