Accounting: Introduction

	management
	Accounting: Introduction

Accountability

The keeping of full accounts of all transactions is based on agency - a separation of authority from action. In general, accountability provides a control over the exercise of delegated power.

The earliest forms of accounts of individual traders often simply recorded moneys owed, or owing to other traders or bankers. Cash transactions did not have to be recorded by an individual dealing on his or her own behalf. However, where traders or officials acted as agents of a master or government, all transactions had to be recorded and the agent would be held to give account of all dealings he had undertaken on the principal's behalf. The most frequently delegated form of power in our society is the power to control economic resources.

A particular strength of accounting is its ability to focus down on intricate details of a company's financial affairs, yet also provide a basis for almost unlimited aggregation to provide a strategic overview of the company's overall financial position. However, the all pervasive nature of accounting measures, and the establishment of financial targets based on them can tend to dominate managerial decision-making. Strategic control may sometimes suffer from overemphasis on specific summary financial measures. It is therefore important to understand the underlying strategic intentions and the deficiencies in accounting measures to form a reasoned appreciation of their usefulness.