History of Accounting Worldwide and in Nigeria

Financial Accounting SS1 First Term Lesson Note

Week 2: History of Accounting Worldwide and Nigeria

Subject: Financial Accounting

Class: SS1
Term: First Term
Week: 2
Age: 14-16 years
Duration: 40 minutes

Topic: History of Accounting Worldwide and Nigeria

Sub-Topics:

1. Users of Accounting Information
2. Internal and External Users and Their Needs
3. Characteristics of Accounting Information

Behavioral Objectives

By the end of the lesson, students should be able to:

1. Narrate the emergence of accounting worldwide and specifically in Nigeria.
2. Enumerate the beneficiaries of accounting information.
3. Identify the needs of both internal and external users of accounting information.

Keywords

• Accounting: Systematic recording and reporting of financial transactions.
• Internal Users: Users within an organization, e.g., managers.
• External Users: Users outside an organization, e.g., investors.
• Relevance: Usefulness of accounting information.

Set Induction

The teacher narrates a brief story about how ancient merchants used simple methods like tally sticks to keep records of their transactions and asks the students why keeping records is important today.

Entry Behavior

Students are familiar with basic record-keeping methods and why people need information to make decisions.

Learning Resources and Materials

1. Charts showing internal and external users of accounting information.
2. A timeline of accounting history.
3. Lagos State-approved accounting textbooks.

Building Background/Connection to Prior Knowledge

The teacher will ask students to mention examples of people who might need financial information and discuss how this affects businesses today.

Embedded Core Skills

• Critical Thinking
• Financial Literacy
• Communication

Learning Materials

1. History of accounting materials.
2. Diagrams of accounting information flow.
3. Accounting textbooks.

Reference

• Lagos State Scheme of Work for Financial Accounting
• Accounting History by A.C. Littleton

Content

1. Emergence of Accounting Worldwide

• Ancient Records: Accounting dates back to 5000 BC in Mesopotamia, where records were kept for trade and taxes.
• Luca Pacioli (1494): Known as the “Father of Accounting,” he published the first book on double-entry bookkeeping.
• Modern Accounting: Evolved with industrialization, requiring more complex financial records.

2. Emergence of Accounting in Nigeria

• Accounting practices began with the advent of colonial administration.
• The introduction of Western education and trade facilitated modern accounting methods.
• Establishment of professional bodies like the Institute of Chartered Accountants of Nigeria (ICAN) in 1965.

3. Users of Accounting Information

• Internal Users:
  • Management: For decision-making and strategy planning.
  • Employees: To assess job security and benefits.
• External Users:
  • Investors: To evaluate profitability and risks.
  • Creditors: To assess repayment ability.
  • Government: For tax purposes and regulation compliance.

4. Needs of Internal and External Users

5. Characteristics of Accounting Information

1. Relevance: Useful for decision-making.
2. Reliability: Free from error and bias.
3. Comparability: Enables evaluation across time and entities.
4. Consistency: Uniform methods applied over time.

History of Accounting Worldwide and in Nigeria

Objective Questions

1. When did accounting first emerge in the world?
   a) In the 20th century
   b) In ancient Egypt
   c) In the 15th century in Italy
   d) In ancient Greece
   Answer: c) In the 15th century in Italy
2. Who is considered the father of accounting?
   a) Leonardo da Vinci
   b) Luca Pacioli
   c) Thomas Edison
   d) William Shakespeare
   Answer: b) Luca Pacioli
3. Which country is credited with the origin of double-entry bookkeeping?
   a) United States
   b) United Kingdom
   c) Italy
   d) Germany
   Answer: c) Italy
4. Which of the following is a characteristic of accounting information?
   a) It is complex and difficult to understand
   b) It should be timely, relevant, and accurate
   c) It is only useful for internal management
   d) It is only useful to external stakeholders
   Answer: b) It should be timely, relevant, and accurate
5. What is the primary role of accounting information for external users?
   a) To manage daily transactions
   b) To assist in decision-making about investing and lending
   c) To prepare internal reports
   d) To calculate payroll
   Answer: b) To assist in decision-making about investing and lending
6. Which of the following is an example of an internal user of accounting information?
   a) Bank
   b) Investors
   c) Shareholders
   d) Managers
   Answer: d) Managers
7. What was a major milestone in the history of accounting in Nigeria?
   a) The introduction of double-entry bookkeeping
   b) The formation of the Institute of Chartered Accountants of Nigeria (ICAN) in 1965
   c) The establishment of the first stock exchange
   d) The launch of Nigeria’s first public bank
   Answer: b) The formation of the Institute of Chartered Accountants of Nigeria (ICAN) in 1965
8. Which of the following best describes external users of accounting information?
   a) They are interested in financial statements for decision-making regarding investments, loans, or business strategies.
   b) They are only interested in the daily cash flow of a business.
   c) They manage day-to-day operations of a business.
   d) They are responsible for internal auditing.
   Answer: a) They are interested in financial statements for decision-making regarding investments, loans, or business strategies.
9. Which of these is a key need of internal users of accounting information?
   a) Information to assess company performance for decision-making and planning
   b) Information for external reporting
   c) Financial data for investment purposes
   d) Financial data for tax filings
   Answer: a) Information to assess company performance for decision-making and planning
10. The Institute of Chartered Accountants of Nigeria (ICAN) was established to:
    a) Regulate business practices in Nigeria
    b) Promote financial literacy among Nigerians
    c) Set standards for accounting practice and education in Nigeria
    d) Assist businesses in expanding internationally
    Answer: c) Set standards for accounting practice and education in Nigeria
11. Which of the following is a primary characteristic of good accounting information?
    a) It must be difficult to understand
    b) It must be confidential
    c) It must be timely and relevant
    d) It must be applicable to only large businesses
    Answer: c) It must be timely and relevant
12. Who are considered external users of accounting information?
    a) Accountants
    b) Company managers
    c) Investors, creditors, and regulatory authorities
    d) Employees
    Answer: c) Investors, creditors, and regulatory authorities
13. In which country was the first written evidence of accounting found?
    a) United States
    b) Egypt
    c) Italy
    d) Mesopotamia
    Answer: d) Mesopotamia
14. Which of these is an important use of accounting information for external users?
    a) To assess the profitability and financial health of a business
    b) To manage internal payroll and expenses
    c) To make internal operational decisions
    d) To regulate business expenditures
    Answer: a) To assess the profitability and financial health of a business
15. The main focus of accounting in Nigeria during the colonial period was:
    a) Promoting financial independence for local businesses
    b) Managing government expenditure and trade
    c) Setting up a national accounting body
    d) Ensuring proper taxation and auditing for foreign businesses
    Answer: b) Managing government expenditure and trade
16. Accounting dates back to _______ in Mesopotamia.
    a. 2000 BC
    b. 5000 BC
    c. 1000 AD
    d. 1494
17. The _______ published the first book on double-entry bookkeeping.
    a. Ancient Romans
    b. Ancient Greeks
    c. Luca Pacioli
    d. Adam Smith
18. Internal users of accounting information include _______.
    a. Investors
    b. Managers
    c. Creditors
    d. Government

Class Activity Discussion (FAQs with Answers)

1. What is the origin of accounting worldwide?
   Answer: Accounting can be traced back to ancient civilizations such as Mesopotamia, where early records of transactions were kept on clay tablets. However, it became more formalized in the 15th century in Italy with the development of double-entry bookkeeping by Luca Pacioli.
2. How did accounting evolve in Nigeria?
   Answer: Accounting in Nigeria began with the establishment of colonial accounting practices, mainly focusing on government expenditure and trade. Over time, Nigeria developed its own accounting standards, with the founding of the Institute of Chartered Accountants of Nigeria (ICAN) in 1965 marking a significant step in the profession’s development.
3. Who are the primary users of accounting information?
   Answer: Accounting information is used by both internal and external users. Internal users include managers and employees who use the information for decision-making within the organization. External users include investors, creditors, and regulatory authorities who rely on the information to make decisions about the business.
4. What are the needs of internal users of accounting information?
   Answer: Internal users, such as managers, need accounting information to make decisions about budgeting, performance evaluation, and operational planning. They require timely, relevant, and accurate data to ensure that the business runs smoothly and efficiently.
5. What are the needs of external users of accounting information?
   Answer: External users, including investors, creditors, and regulatory bodies, require accounting information to evaluate the financial health of a business, make investment decisions, assess creditworthiness, and ensure compliance with financial regulations.
6. What are some of the key characteristics of good accounting information?
   Answer: Good accounting information must be accurate, timely, relevant, understandable, and complete. It should provide a clear representation of the financial situation of a business and be useful for decision-making.
7. How did Luca Pacioli contribute to accounting history?
   Answer: Luca Pacioli, often referred to as the father of accounting, formalized the practice of double-entry bookkeeping in the 15th century. His work “Summa de Arithmetica” introduced this system, which is still used in accounting today.
8. Why is accounting important for external users?
   Answer: External users rely on accounting information to make decisions regarding investments, loans, and regulatory compliance. Accurate and transparent financial statements help these users assess the risks and potential returns associated with a business.
9. Why was the establishment of ICAN important for accounting in Nigeria?
   Answer: The establishment of ICAN in 1965 was pivotal in professionalizing accounting in Nigeria. It set standards for accounting education and practice, ensuring that accountants in Nigeria adhered to international best practices and contributed to the country’s economic development.
10. How did accounting information help businesses in Nigeria during the colonial period?
    Answer: During the colonial period, accounting was primarily focused on managing government expenditure and facilitating trade. It helped the colonial government track resources, manage revenues, and control expenditures, while also enabling businesses to comply with the colonial administration’s financial requirements.
11. Who is considered the Father of Accounting?
    A1: Luca Pacioli is regarded as the Father of Accounting because he published the first book on double-entry bookkeeping in 1494.

     

12. Why is accounting important in Nigeria?
    A2: Accounting helps Nigerian businesses and governments track financial performance, comply with regulations, and make informed decisions.

     

13. What are the characteristics of good accounting information?
    A3: Good accounting information is relevant, reliable, comparable, and consistent.

Evaluation Questions

1. Explain the origin of accounting and its importance in ancient civilizations.
2. Discuss the role of Luca Pacioli in the development of accounting.
3. Identify and explain the key differences between internal and external users of accounting information.
4. Describe the importance of accounting information to external stakeholders.
5. How did accounting practices evolve in Nigeria?
6. Explain the role of the Institute of Chartered Accountants of Nigeria (ICAN) in the accounting profession.
7. What are the key characteristics that make accounting information useful for decision-making?
8. Why is timely and accurate accounting information critical for managers in making business decisions?
9. What role did accounting information play in Nigeria’s colonial economy?
10. Discuss the primary needs of internal users of accounting information in a business.

Presentation

Step 1: Revision of the Previous Topic

The teacher asks students to recall the differences between bookkeeping and financial accounting.

Step 2: Introduction of New Topic

The teacher explains the history of accounting worldwide and in Nigeria using a timeline and examples.

Step 3: Student Contributions and Corrections

Students share what they know about accounting practices in businesses or government. The teacher provides feedback and corrects misconceptions.

Teacher’s Activities

1. Explain the history of accounting worldwide and in Nigeria.
2. List the users of accounting information and their needs.
3. Highlight the characteristics of good accounting information.

Learner’s Activities

1. Listen and take notes.
2. Ask and answer questions about accounting history.
3. Participate in group discussions on users of accounting information.

Assessment

1. Narrate the emergence of accounting worldwide.
2. Identify three internal users of accounting information and their needs.
3. Mention two characteristics of accounting information.

Evaluation Questions

1. Who is the Father of Accounting?
2. Define accounting information.
3. List two internal users of accounting information.
4. Mention three external users of accounting information.
5. State two characteristics of good accounting information.

Conclusion

The teacher summarizes the history of accounting, identifies internal and external users of accounting information, and highlights the characteristics of accounting information.