Professional Ethics In Accounting

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(a) Descibe the history of accounting The history of accounting can be dated back to over thousands of years ago during the ancient civilian times. Accounting is said to have existed even before numbers and words were invented. Nearly 10,000 years ago, accounting was developed in ancient Mesopotamia that is situated between the Tigris-Euphrates river system which was where trading activities would take place among the large population there. Trading occurred even when writing and number systems did not exist at the time. (Long, A Short History of Accounting) Even in ancient times, merchants struggled with common problems such as dishonest boatmen who were responsible to deliver goods up and down the river. Because the writing and number…show more content…
1. Independence and Objectivity Independence is ethically vital in bookkeeping. A fundamental piece of trust settles on the professional members of the accounting body to make unprejudiced choices and suggestions. To be able to accomplish a goal, objectivity is needed to guarantee that proposals made are not based on biased judgments or the influence of outside interests. (Assoc. of Accounting Technicians, n.d.) 2. Integrity In professional ethics, showing integrity means being straightforward and honest in all business and accounting relationships. By upholding integrity, it is required that accountants do not associate themselves with information that they suspect to be materially false. (ICAEW, n.d.) 3. Confidentiality This is the principle that professional accountants are ensured to keep all information confidential. Safe approaches must be followed to preserve the confidentiality of the information. It is illegal to disclose any information unless the professional member has the right or duty to do so. (ICAEW,…show more content…
Explain in detail the three types of business formation. i. Sole proprietorship In the business world, there are three types of business formation. Each of the business formations has their own characteristics and traits. The three types of business formations are Sole Proprietorship, Partnership and Corporation. (R.S.Hansen, n.d.) A sole proprietorship, or also known as sole trader, is a business where everything is run, managed and controlled by only one person. Sole proprietorship is not considered as a legal entity, however it refers to the person who owns the business, and who bares the liability. There are a quite number of advantages and disadvantages for sole proprietorship. The popular advantage for sole proprietorship is that it is very easy to set up, as start-up costs are considerably very low. Other than that, all of the profits gained will go to the owner itself. Sole proprietorship also do not have to pay any extra tax. However, sole proprietors are accountable for unlimited liability. This means that creditors will go after their personal belongings if they are unable to pay their debts. (Wikipedia, 2017) (Entrepreneur,

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