A business school is a university-level institution that confers degrees in business administration or management. According to Kaplan business schools are "educational institutions that specialize in teaching courses and programs related to business and/or management"; such a school can be known as school of management, school of business administration, or colloquially b-school or biz school. A business school teaches topics such as accounting, strategy, entrepreneurship, human resource management, management science, management information systems, international business, marketing, organizational psychology, organizational behavior, public relations, research methods and real estate among others. There are several forms of business schools, including a school of business, business administration, management. Most of the university business schools consist of faculties, colleges, or departments within the university, predominantly teach business courses. In North America, a business school is understood to be a university program that offers a graduate Master of Business Administration degrees and/or undergraduate bachelor's degrees.
In Europe and Asia, some universities teach predominantly business courses. Owned business school, not affiliated with any university. Kaplan classifies business schools along four Corners: Culture: Independent of their actual location, business schools can be classified according to whether they follow the European or the US model. Compass: Business schools can be classified along a continuum, with international/ global schools on one end and regional/ local schools on the other. Capital: Business schools can either be publicly funded or funded, for example through endowments or tuition fees. Content: Business school can be classified according to whether a school considers teaching or research to be its primary focus. 1759 – The Aula do Comércio in Lisbon was the first institution to specialise in the teaching of accounting in the world. It provided a model for development of similar government-sponsored schools across Europe, closed in 1844. Therefore, the Aula do. 1819 -- The world's first business school, ESCP Europe was in France.
It is the oldest business school in the world and now has campuses in Berlin, Madrid, Paris and Warsaw. 1855 – The Institut Supérieur de Commerce d'Anvers and the Institut Saint-Ignace – École Spéciale de Commerce et d'Industrie were founded in the same year in the city of Antwerp, Belgium. After getting university status in 1965 and after 150 years of business education and rivalry between each other, both merged in 2003 into what became the University of Antwerp. 1857 – The world's first public business school, Budapest Business School was founded in Budapest in Austria-Hungary as the first business school in Central Europe. 1868 – The Ca' Foscari University was founded in Venice. It is one of the oldest in the world. 1871 – The Rouen Business School which has merged with Reims Management School under the name of NEOMA Business School. Rouen Business School is the second oldest French business school. 1871 – The ESC Le Havre was created. Created the same year than Rouen Business School it is the second oldest French business school.
1881 – The Wharton School of the University of Pennsylvania is the United States' first business school. HEC Paris was established by the Paris Chamber of Commerce. 1892 – The ESC Lille in northern France which has mergered with CERAM Business School under the name of Skema Business School since 2009. 1898 – On the west coast Haas School of Business is established as the College of Commerce of the University of California with Carl Copping Plehn as the Dean in 1898 and became the first public business school. The Booth School of Business The University of Chicago Booth School of Business traces its beginnings to 1898 when university faculty member James Laurence Laughlin chartered the College of Commerce and Politics. 1898 – Handelshochschule Leipzig, today Leipzig Graduate School of Management, was founded as the first Business School in Germany, so it is the oldest university teaching economics in German speaking regions. 1898 – The University of St. Gallen established the first university in Switzerland teaching business and economics.
1900 – The first graduate school of business in the United States, the Tuck School of Business at Dartmouth College, was founded. The school conferred the first advanced degree in business a Master of Science in Commercial Sciences, the predecessor to the MBA. 1902 – The Birmingham Business School of University of Birmingham is the United Kingdom's first business school. Established as the School of Commerce in Birmingham, United Kingdom. 1903 – The Solvay Brussels School of Economics and Management of Université Libre de Bruxelles is the Belgium's first business school created by an entrepreneur Ernest Solvay, founder of the chemistry company Solvay. 1906 – The Department of Commerce was founded as part of McGill University in Montreal, Canada developing into the Desautels Faculty of Management. 1906 – The Warsaw School of Economics was established as the first university in Poland dedicated to teaching commerce and economics. 1907 – HEC Montréal is founded in Montreal, being the first Schoo
Chicago school of economics
The Chicago school of economics is a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago, some of whom have constructed and popularized its principles. In the context of macroeconomics, it is connected to the "freshwater school" of macroeconomics, in contrast to the saltwater school based in coastal universities. Chicago macroeconomic theory rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics based on the concept of rational expectations; the freshwater-saltwater distinction is antiquated today, as the two traditions have incorporated ideas from each other. New Keynesian economics was developed as a response to new classical economics, electing to incorporate the insight of rational expectations without giving up the traditional Keynesian focus on imperfect competition and sticky wages. Chicago economists have left their intellectual influence in other fields, notably in pioneering public choice theory and law and economics, which have led to revolutionary changes in the study of political science and law.
Other economists affiliated with Chicago have made their impact in fields as diverse as social economics and economic history. Thus, there is not a clear delineation of the Chicago school of economics, a term, more used in the popular media than in academic circles. Nonetheless, Kaufman says that the School can be characterized by: A deep commitment to rigorous scholarship and open academic debate, an uncompromising belief in the usefulness and insight of neoclassical price theory, a normative position that favors and promotes economic liberalism and free markets; the University of Chicago Economics department, considered one of the world's foremost economics departments, has been awarded 13 Nobel Prizes in Economics as of 2018 —more than any other university. The term was coined in the 1950s to refer to economists teaching in the Economics Department at the University of Chicago, related academic areas at the University such as the Booth School of Business and the Law School, they met together in frequent intense discussions that helped set a group outlook on economic issues, based on price theory.
The 1950s saw the height of popularity of the Keynesian school of economics, so the members of the University of Chicago were considered outside the mainstream. Besides what is popularly known as the "Chicago school", there is an "Old Chicago" school of economics, consisting of an earlier generation of economists such as Frank Knight, Henry Simons, Lloyd Mints, Jacob Viner, Aaron Director and others; this group had diverse interests and approaches, but Knight and Director in particular advocated a focus on the role of incentives and the complexity of economic events rather than on general equilibrium. Outside of Chicago, these early leaders were important influences on the Virginia school of political economy. Nonetheless, these scholars had an important influence on the thought of Milton Friedman and George Stigler, most notably in the development of price theory and transaction cost economics. A third wave of Chicago economics is led by macroeconomists Robert Lucas Eugene Fama. A further significant branching of Chicago thought was dubbed by George Stigler as "Chicago political economy".
Inspired by the Coasian view that institutions evolve to maximize the Pareto efficiency, Chicago political economy came to the surprising and controversial view that politics tends towards efficiency and that policy advice is irrelevant. Gary Becker was a Nobel Prize-winner from 1992 and was known in his work for applying economic methods of thinking to other fields, such as crime, sexual relationships and drugs, assuming that people act rationally, his work was focused in labor economics. His work inspired the popular economics book Freakonomics, he is considered one of the founding fathers of Chicago political economy. Ronald Coase was the most prominent economic analyst of the 1991 Nobel Prize-winner, his first major article, "The Nature of the Firm", argued that the reason for the existence of firms is the existence of transaction costs. Rational individuals trade through bilateral contracts on open markets until the costs of transactions mean that using corporations to produce things is more cost-effective.
His second major article, "The Problem of Social Cost", argued that if we lived in a world without transaction costs, people would bargain with one another to create the same allocation of resources, regardless of the way a court might rule in property disputes. Coase used the example of an 1879 London legal case about nuisance named Sturges v Bridgman, in which a noisy sweetmaker and a quiet doctor were neighbours. Coase said that regardless of whether the judge ruled that the sweetmaker had to stop using his machinery, or that the doctor had to put up with it, they could strike a mutually beneficial bargain that reaches the same outcome of resource distribution. Only the existence of transaction costs may prevent this. So, the law ought to pre-empt what would happen, be guided by the most efficient solution; the idea is that law and regulation are not as important or effective at helping people as lawyers and government planners believe. Coase and others like him wanted a change of approach, to put the burden of proof for positive effects on a government, intervening in the market, by analysing the costs of action.
An economist is a practitioner in the social science discipline of economics. The individual may study and apply theories and concepts from economics and write about economic policy. Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets, macroeconomic analysis, microeconomic analysis or financial statement analysis, involving analytical methods and tools such as econometrics, economics computational models, financial economics, mathematical finance and mathematical economics; the professionalization of economics, reflected in academia, has been described as "the main change in economics since around 1900." Economists debate the path. It is a debate between a scholastic orientation, focused on mathematical techniques, a public discourse orientation, more focused on communicating to lay people pertinent economic principles as they relate to public policy. Surveys among economists indicate a preference for a shift toward the latter.
Most major universities have an economics faculty, school or department, where academic degrees are awarded in economics. Getting a PhD in economics takes six years, on average, with a median of 5.3 years. The Nobel Memorial Prize in Economics, established by Sveriges Riksbank in 1968, is a prize awarded to economists each year for outstanding intellectual contributions in the field of economics; the prize winners are announced in October every year. They receive their awards on the anniversary of Alfred Nobel's death. Economists work in many fields including academia, government and in the private sector, where they may "...study data and statistics in order to spot trends in economic activity, economic confidence levels, consumer attitudes. They assess this information using advanced methods in statistical analysis, computer programming they make recommendations about ways to improve the efficiency of a system or take advantage of trends as they begin."In contrast to regulated professions such as engineering, law or medicine, there is not a required educational requirement or license for economists.
In academia, to be called an economist requires a Ph. D. degree in Economics. In the US government, on the other hand, a person can be hired as an economist provided that they have a degree that included or was supplemented by 21 semester hours in economics and three hours in statistics, accounting, or calculus. A professional working inside of one of many fields of economics or having an academic degree in this subject is considered to be an economist. In addition to government and academia, economists are employed in banking, accountancy, marketing, business administration and non- or not-for profit organizations. Politicians consult economists before enacting economic policy. Many statesmen have academic degrees in economics. Economics graduates are employable in varying degrees depending on the regional economic scenario and labour market conditions at the time for a given country. Apart from the specific understanding of the subject, employers value the skills of numeracy and analysis, the ability to communicate and the capacity to grasp broad issues which the graduates acquire at the university or college.
Whilst only a few economics graduates may be expected to become professional economists, many find it a base for entry into a career in finance – including accounting, insurance and banking, or management. A number of economics graduates from around the world have been successful in obtaining employment in a variety of major national and international firms in the financial and commercial sectors, in manufacturing, retailing and IT, as well as in the public sector – for example, in the health and education sectors, or in government and politics. Small numbers go on to undertake postgraduate studies, either in economics, teacher training or further qualifications in specialist areas. In Brazil, unlike most countries in the world where the profession is not regulated, the profession of Economist is regulated by Law. 1411 of August 13, 1951. The professional designation of economist, according to the said law, is exclusive to the bachelors in economics graduates in Brazil. According to the United States Department of Labor, there were about 15,000 non-academic economists in the United States in 2008, with a median salary of $83,000 the top ten percent earning more than $147,040 annually.
Nearly 135 colleges and universities grant around 900 new Ph. D.s every year. Incomes are highest for those in the private sector, followed by the federal government, with academia paying the lowest incomes; as of January 2013, PayScale.com showed Ph. D. economists' salary ranges as follows: all Ph. D. economists, $61,000 to $160,000. D. corporate economists, $71,000 to $207,000. The largest single professional grouping of economists in the UK are the more than 1000 members of the Government Economic Service, who work in 30 government departments and agencies. Analysis of destination surveys for economics graduates from a number of selected top schools of economics in the United Kingdom, shows nearly 80 percent in employment six months after graduation – with a wide range of roles and employers, including regional and international organisations, across many sectors; this figure compares favourably with the national picture, with 64 percent of economics graduates in employment. Some current we
Leon C. Marshall
Leon Carroll Marshall was an American economist, Professor of Political Economy and fourth dean of the Booth School of Business from 1909 to 1924, Professor at the Law School of the Johns Hopkins University, Professor at the American University. He is known for his works on our economic organization, business administration, curriculum-making in the social studies and the divorce court. Born in Zanesville, Ohio in 1879, Marshall in 1900 obtained his BA at the Ohio Wesleyan University, in 1902 his MA from Harvard University, Later on in 1918 he obtained his law degree at the Ohio Wesleyan University. Marshall started his academic career at the business school of the University of Chicago, the Booth School of Business, where he became Professor of Political Economy and was fourth dean of the business school from 1909 to 1924. Sequentially he moved to the Johns Hopkins University, where he was professor and director of its Institute of Law from 1928 to 1933. In 1934 Marshall was appointed by President Franklin D. Roosevelt as member of the National Labor Board and of the National Recovery Administration to support Roosevelt's New Deal policies and the "measure and combat the effects of the Great Depression."
He became a member of the National Educational Association. From 1936 to 1948 Marshall was Professor of Political Economy at American University in Washington, D. C. Marshall wrote several textbooks on Social Studies topics at the secondary school and grade-school level, starting with Materials For the Study of Elementary Economics in 1913 coauthored with James A. Field and Chester Whitney Wright. Marshall came into prominence in the years from 1913 to 1919, when he was involved with professor of Economics James A. Field and the economic historian Chester W. Wright in "attempts to move economics instruction away from the'rigorous drill in orthodox theory' or the'straight-jacket of conventional theory' to a method of instruction emphasizing the development of economic institutions, inquiry into current problems and issues, fostering of creativity and originality. To this end, they produced a book of readings to supplement the usual texts." In 1918 Marshall published his Readings in Industrial Society.
This work had a heavy emphasis on the institutional development of industrial society, the money economy and financial organization, machine industry, the wage system and the worker, industrial concentration, private property, social control."The work contained reading from founders of the institutional economics such as Thorstein Veblen, Wesley Clair Mitchell, Walton H. Hamilton, Harold G. Moulton, Robert F. Hoxie, John M. Clark, Edwin Cannan, John A. Hobson, he reprinted diagrams from the work of Henry Rogers Seager, picturing the economic production and distribution from 1904, Paul Nystrom, picturing the channels of distribution for various lines of goods from 1915. Leon Ardzrooni, known as "Veblen's most faithful disciple", reviewed the book for Political Science Quarterly, introduced the work as follows: As indicated in the subtitle of this formidable volume, the author has brought together a large array of descriptive material for " a study in the structure and functioning of economic organization."
Among a considerable number of students in the social sciences the feeling has been growing that economics, as studied in our colleges and universities, lacks the substance and security, obtained in other fields of intellectual endeavor by a happy coordination of historical perspective and speculative logomachy. With a view to attain such an end, there have appeared in recent years several volumes of " selected readings " for the study of economics and economic problems; the present one is a creditable addition to this goodly list in the publication of which the University of Chicago Press has taken a leading part. Clarence Edwin Ayres explicitly regarded "Marshall's book as a contribution to the institutional type of economics." In 1921 Marshall and Leverett S. Lyon published their "Our economic organization." The main purpose of this book in the field of elementary economics is to present in systematic fashion the structure of economic society under the spur of competition. The treatment is brief on account of the large number of topics to be covered, on account of the requirements of an elementary text book.
The approach is functional. The authors stated in its preface the purpose is to present economic organization in its functional aspect, to show in some detail not so much what the organization is as how it operates; the distinguishing feature of the volume is the effort to depict social structures in terms of what they do. The functions, the uses, the work, of banks, of business organization, of competition, of specialization], of government, of scientific management, of education, of other multitudinous agencies which together make up our want-gratifying machine, are the matters with which the book is concerned, and more specific "it is a study of the devices which exist in industrial society in terms of their activities, quite secondarily, in terms of their structures." In a 1921 review of the work The American Economic Review, by Everett Walton Goodhue, Professor of Sociology and Economics at Colgate University, Goodhue explained, that this work compares the economic organization to machine, introduces a process approach to economics.
Goodhue explained. Our economic organization is compared to a machine with parts, articulation of parts, motive power, control or guidance. No one claims that the machine at all times or at any time works perfectly. There are still many defects; some parts are not well ada
George Joseph Stigler was an American economist, the 1982 laureate in Nobel Memorial Prize in Economic Sciences and a key leader of the Chicago School of Economics. Stigler was born in Seattle, the son of Elsie Elizabeth and Joseph Stigler, he spoke German in his childhood. He graduated from the University of Washington in 1931 with a BA and spent a year at Northwestern University from which he obtained his MBA in 1932, it was during his studies at Northwestern that Stigler developed an interest in economics and decided on an academic career. After he received a tuition scholarship from the University of Chicago, Stigler enrolled there in 1933 to study economics and went on to earn his Ph. D. in economics there in 1938. He taught at Iowa State College from 1936 to 1938, he spent much of World War II at Columbia University, performing mathematical and statistical research for the Manhattan Project. He spent one year at Brown University, he served on the Columbia faculty from 1947 to 1958. At Chicago, he was influenced by Frank Knight, his dissertation supervisor.
Milton Friedman, a friend for over 60 years, commented that it was remarkable for Stigler to have passed his dissertation under Knight, as only three or four students had managed to do so in Knight's 28 years at Chicago. Stigler's influences included Jacob Viner and Henry Simons as well as students W. Allen Wallis and Friedman. Stigler is best known for developing the Economic Theory of Regulation known as capture, which says that interest groups and other political participants will use the regulatory and coercive powers of government to shape laws and regulations in a way, beneficial to them; this theory is a component of the public choice field of economics but is deeply opposed by public choice scholars belonging to the "Virginia School," such as Charles Rowley. He carried out extensive research in the history of economic thought. Stigler's most important contribution to economics was published in his landmark article, "The Economics of Information." According to Friedman, Stigler "essentially created a new area of study for economists."
Stigler stressed the importance of information: "One should hardly have to tell academicians that information is a valuable resource: knowledge is power. And yet it occupies a slum dwelling in the town of economics."His 1962 article "Information in the Labor Market" developed the theory of search unemployment. In 1963 he was elected as a Fellow of the American Statistical Association, he was known for his sharp sense of humor, he wrote a number of spoof essays. In his book The Intellectual and the Marketplace, for instance, he proposed Stigler's Law of Demand and Supply Elasticities: "all demand curves are inelastic and all supply curves are inelastic too." The essay referenced studies that found many goods and services to be inelastic over the long run and offered a supposed theoretical proof. Another essay, "A Sketch on the Truth in Teaching," described the consequences of a set of court decisions that held universities responsible for the consequences of teaching errors; the Stigler diet is named after him.
Stigler wrote numerous articles on the history of economics, published in the leading journals and republished 14 of them in 1965. The American Economic Review said, "many of these essays have become such well-known landmarks that no scholar in this field should be unfamiliar with them.... The lucid prose, penetrating logic, wry humor... have become the author's trademarks." However, economist Deirdre McCloskey referred to Stigler as "among the worst historians of economic thought in the history of the discipline" who "read a lot but was defective in paying attention."Stigler was a founding member of the Mont Pelerin Society and was its president from 1976 to 1978. He received National Medal of Science in 1987.. Production and Distribution Theories: The Formative Period. New York: Macmillan. Preview.. "The Economics of Information," Journal of Political Economy, 69, pp. 213–25. "Information in the Labor Market." Journal of Political Economy, 70, Part 2, pp. 94–105. The Intellectual and the Marketplace.
Selected Papers, no. 3. Chicago: University of Chicago Graduate School of Business. Reprinted in Sigler, pp. 79–88. "A Dialogue on the Proper Economic Role of the State." Selected Papers, no. 7. Pp. 3–20. Chicago: University of Chicago Graduate School of Business. Capital and Rates of Return in Manufacturing Industries. National Bureau of Economic Research, Princeton, N. J.: Princeton University Press. Essays in the History of Economics. University of Chicago Press. 1965.. The Organization of Industry. Homewood, IL: Richard D. Irwin; the Behavior of Industrial Prices. National Bureau of Economic Research, New York: Columbia University Press. "The Theory of Economic Regulation." Bell Journal of Economics and Management Science, no. 3, pp. 3–18. Citizen and the State: Essays on Regulation. "The Process and Progress of Economics," Nobel Memorial Lecture, 8 December. The Economist as Preacher, Other Essays. Chicago: University of Chicago Press; the Organization of Industry. Memoirs of an Unregulated Economist. University of Chicago Press.
2003. ISBN 978-0-226-77440-4. Autobiography; the Essence of Stigler, K. R. Leube and T. G. Moore, ed. Scroll or page-arrow to respective essays. ISBN 0-8179-8462-3; the Theory of Price, Fourth Edition. New York: Macmillan. Ed. Chicago Studies in Political Economy Stephen Stigler, hi
Milton Friedman was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago's Department of Economics, Law School and Graduate School of Business from the 1940s onward. Several students and young professors who were recruited or mentored by Friedman at Chicago went on to become leading economists, including Gary Becker, Robert Fogel, Thomas Sowell and Robert Lucas Jr. Friedman's challenges to what he called "naive Keynesian" theory began with his 1950s reinterpretation of the consumption function. In the 1960s, he became the main advocate opposing Keynesian government policies and described his approach as using "Keynesian language and apparatus" yet rejecting its "initial" conclusions.
He theorized that there existed a "natural" rate of unemployment and argued that unemployment below this rate would cause inflation to accelerate. He argued that the Phillips curve was in the long run vertical at the "natural rate" and predicted what would come to be known as stagflation. Friedman promoted an alternative macroeconomic viewpoint known as "monetarism" and argued that a steady, small expansion of the money supply was the preferred policy, his ideas concerning monetary policy, taxation and deregulation influenced government policies during the 1980s. His monetary theory influenced the Federal Reserve's response to the global financial crisis of 2007–2008. Friedman was an advisor to Republican President Ronald Reagan and Conservative British Prime Minister Margaret Thatcher, his political philosophy extolled the virtues of a free market economic system with minimal intervention. He once stated that his role in eliminating conscription in the United States was his proudest accomplishment.
In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military floating exchange rates, abolition of medical licenses, a negative income tax and school vouchers and opposed the war on drugs. His support for school choice led him to found the Friedman Foundation for Educational Choice renamed EdChoice. Friedman's works include monographs, scholarly articles, magazine columns, television programs and lectures and cover a broad range of economic topics and public policy issues, his books and essays have had global influence, including in former communist states. A survey of economists ranked Friedman as the second-most popular economist of the 20th century following only John Maynard Keynes and The Economist described him as "the most influential economist of the second half of the 20th century... of all of it". Friedman was born in Brooklyn, New York on July 31, 1912, his parents, Sára Ethel and Jenő Saul Friedman, were Jewish immigrants from Beregszász in Carpathian Ruthenia, Kingdom of Hungary.
They both worked as dry goods merchants. Shortly after his birth, the family relocated to New Jersey. In his early teens, Friedman was injured in a car accident. A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday, he was awarded a competitive scholarship to Rutgers University. In 1932, Friedman graduated from Rutgers University, where he specialized in mathematics and economics and intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression. After graduating from Rutgers, Friedman was offered two scholarships to do graduate work—one in mathematics at Brown University and the other in economics at the University of Chicago. Friedman chose the latter, thus earning a Master of Arts degree in 1933, he was influenced by Jacob Viner, Frank Knight, Henry Simons. It was at Chicago that Friedman met economist Rose Director.
During the 1933–1934 academic year he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz, working on Theory and Measurement of Demand; that year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis. Friedman was unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, D. C. where Franklin D. Roosevelt's New Deal was "a lifesaver" for many young economists. At this stage, Friedman said that he and his wife "regarded the job-creation programs such as the WPA, CCC, PWA appropriate responses to the critical situation," but not "the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration." Foreshadowing his ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued.
Indeed, Friedman concluded that all government intervention associated with the New Deal was "the wrong cure for the wrong disease," arguing that the money supply should have been expanded, instead of contracted. Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960, which argued that the Great Depression was caused by a
Accounting or accountancy is the measurement and communication of financial information about economic entities such as businesses and corporations. The modern field was established by the Italian mathematician Luca Pacioli in 1494. Accounting, called the "language of business", measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors and regulators. Practitioners of accounting are known as accountants; the terms "accounting" and "financial reporting" are used as synonyms. Accounting can be divided into several fields including financial accounting, management accounting, external auditing, tax accounting and cost accounting. Accounting information systems are designed to support related activities. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors and suppliers.
The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system. Accounting is facilitated by accounting organizations such as standard-setters, accounting firms and professional bodies. Financial statements are audited by accounting firms, are prepared in accordance with accepted accounting principles. GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board in the United States and the Financial Reporting Council in the United Kingdom; as of 2012, "all major economies" have plans to converge towards or adopt the International Financial Reporting Standards. The history of accounting is thousands of years old and can be traced to ancient civilizations; the early development of accounting dates back to ancient Mesopotamia, is related to developments in writing and money. By the time of Emperor Augustus, the Roman government had access to detailed financial information.
Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East and was further refined in medieval Europe. With the development of joint-stock companies, accounting split into financial accounting and management accounting; the first work on a double-entry bookkeeping system was published by Luca Pacioli. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880. Both the words accounting and accountancy were in use in Great Britain by the mid-1800s, are derived from the words accompting and accountantship used in the 18th century. In Middle English the verb "to account" had the form accounten, derived from the Old French word aconter, in turn related to the Vulgar Latin word computare, meaning "to reckon"; the base of computare is putare, which "variously meant to prune, to purify, to correct an account, hence, to count or calculate, as well as to think."The word "accountant" is derived from the French word compter, derived from the Italian and Latin word computare.
The word was written in English as "accomptant", but in process of time the word, always pronounced by dropping the "p", became changed both in pronunciation and in orthography to its present form. Accounting has variously been defined as the keeping or preparation of the financial records of an entity, the analysis and reporting of such records and "the principles and procedures of accounting". Accountancy refers to the occupation or profession of an accountant in British English. Accounting has several subfields or subject areas, including financial accounting, management accounting, auditing and accounting information systems. Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, potential investors and creditors, it calculates and records business transactions and prepares financial statements for the external users in accordance with accepted accounting principles. GAAP, in turn, arises from the wide agreement between accounting theory and practice, change over time to meet the needs of decision-makers.
Financial accounting produces past-oriented reports—for example the financial statements prepared in 2006 reports on performance in 2005—on an annual or quarterly basis about the organization as a whole. This branch of accounting is studied as part of the board exams for qualifying as an actuary; these two types of professionals and actuaries, have created a culture of being archrivals. Management accounting focuses on the measurement and reporting of information that can help managers in making decisions to fulfill the goals of an organization. In management accounting, internal measures and reports are based on cost-benefit analysis, are not required to follow the accepted accounting principle. In 2014 CIMA created the Global Management Accounting Principles; the result of research from across 20 countries in five continents, the principles aim to guide best practice in the d