Everyone is well aware that accounting is one of the most important areas of the economy and has become so widespread in our lives today; however, few people know about the history of accounting.
It reflects the various facts of economic life and leads them into a common logical system. We can talk about all these features and possibilities but how often do we think about the way this system arose and the ways of its development?
There is a good chance you have never covered this in your accounting homework nor was it included in your overview of the basic accounting principle or the lessons based on the accounting cycle. Ever been caught up studying for an exam and wondered what is the larger picture of the accounting world we partake in?
Let’s go back in time and help answer these questions.
History of Accounting?
Luca Pacioli, an Italian mathematician is the first person to have published detailed material on the double entry system of accounting based on the procedures in use by Venetian merchants during the Italian renaissance. His documentation included journals, ledgers, cost accounting, and accounting ethics. Most of the accounting cycles and principles he described are still in use and up to date.
When did accounting first start?
The development of accounting dates back to ancient Mesopotamia. In 7500 BC, Mesopotamia used small clay objects as counters for keeping account of goods in that each object represented particular quantities of different commodities like food, clothing, and even labor.
With time they became increasingly complex bearing markings and eventually imprints of these markings onto parchment replaced the counters themselves. The need to keep a record of both goods and currency was accelerated by several factors one being the ability to communicate personal wealth since affluent members of society wanted to record what they had, owed, and what was owed to them.
The other factor was the rise of ruling entities such as royal families and governments which led to the development of new branches and careers in Accounting. A specific concern for these sections of society was finding more ways to record and demand tax. The development of global trade meant business was happening on a larger scale.
Why is the history of accounting important
The history of accounting promotes the study of accounting as a social and technical practice and encourages the identification of the impact of accounting and accounting change on organizational and social functioning and development. It also helps to explain the phenomenal growth that the profession of accountancy has enjoyed since the first royal charters were granted to society.