BA1 Lesson #2 - History of Accounting

Knowing the history of accounting is indeed vital. The reason is for you to know your roots and in this lesson, we will cover the history of accounting and how its processes evolved.

The History of Accounting

The discipline was firstly recognized in the fertile land of Mesopotamia in 8,500 BC. People traded clay objects for commodities like wool, spices, clothing and other goods. Archaeologists discovered clayed tablets in which symbols and other characters were engraved. They believed that such symbols were used to keep records of goods sold, goods acquired and other transactions during those times.

Accounting was also seen in the ancient Babylon, Egypt and Greece. People also used clay tablets to keep their records. In later years, the ancient Egypt switched to using papyrus, a water plant, in recording their transactions. Egyptians’ records contain payments, wages of their laborers, cost of labor, and purchase requisitions.

These just proved that accounting already existed during biblical times!

Major developments of the profession were seen during the Renaissance period in Italy. Men during this time recorded their transactions in single amount with a little bit explanation beside. This is the so-called single entry system which most non-accounting majors use in keeping track of their money.

The Italian Monk

The climax of the history of accounting happened when an Italian math-lover published a book called Summa de Arithmetica, Geometrica, Proportioni et Proportionalita which means Everything About Arithmetic, Geometry, Proportions and Proportionalita and this Italian monk that we are talking about is Friar Luca Pacioli. This thirty-six chapter book thoroughly tackled the double-entry system (debit and credit) and other commerce-related concepts. Pacioli believed that in everything we lose, there is something we gain.

Not until he published the aforementioned book, people used to record business transactions in single-entry system.

The world of accounting boomed because of Pacioli’s book and that is why he is considered to be the father of the double-entry system. In some books and references, Pacioli is also considered to be the father of accounting.

Assigning of Cost

The Industrial Revolution changed the way goods are produced from the craftsman and/or artisan method to the assembly-line method. Cost accounting, which focuses with the assigning of costs to products, also took the center stage during the mid-18^th to the mid-19^th centuries.

The Perpetual Development

These developments never stopped and as a matter of fact, accounting continues to grow to achieve unity in response to nations’ differing traditions, capital markets, business practices and legal systems. Today, the International Accounting Standards Board (former International Accounting Standards Council) regularly issues and releases standards and other major modifications in pursuit to international comparability of financial statements.

These are just some of the basic stuff that you need to learn as of now. In our Intermediate Accounting lessons, we will cover the whole evolution of the profession as well as the accounting bodies involved such as the IASB. 

PHOTO REFERENCE

http://www.storyofmathematics.com/sumerian.html