These concepts originate from the merchants of the Italian City States. Glautier & Underdown (1991) point out that the main principles of the Italian Method were set out by Luca Pacioli in his famous work Summa de Arithmetica, Geometrica, Proportioni et Proportionalita which was published in Venice in 1494. .
Financial accounting is concerned with classifying and measuring the transactions of a business and recording them. At the end of a period of time, usually a year but possibly more frequently, a profit and loss statement is prepared to show financial performance over that period of time and a balance sheet to show the financial position of the business at the end of the period. Other important parts of financial accounting are the report of the directors, notes relating to the accounts, auditor's report, notice of the annual general meeting etc. .
Management accounting is concerned with future events and its main function is to provide financial information to managers. Such information will be needed by the managers so that they can plan the progress of the business, control the activities and see the financial implications of any decisions they may have to take. .
Social welfare accounting is an entirely new phase in accounting development. It is concerned with the social effects of business decisions. .
The definition of accounting has changed through the years and it is interesting to compare and contrast these old definitions. Glautier & Underdown (1991) bring our attention to the fact that accounting was defined the following way by Littleton (1953): "The central purpose of accounting is to make possible the periodic matching of costs (efforts) and revenues (accomplishments). This concept is the nucleus of accounting theory, and a benchmark that affords a fixed point of reference for accounting discussions." It can be concluded from this early definition of accounting that in the middle of this century accounting meant no more than simply the recording of costs and revenues, i.
