A Brief History Of Accounting

Accounting is one of the oldest professions. The history of accounting dates back to the earliest days of civilisation driven by the trade system of crops and products necessary for survival. As the barter system expanded to include monetary exchange, methods were formalised by 2000 BC. To include the creation of accurate records of the quantities and relative values.

Influence of Earliest Accountants
Through archaeological discoveries of artefacts, researchers are learning more about the true influence the earliest accountants had on civilisation. Through their discoveries, archaeologists have discovered accountants participated in the development of:

  • Trade – expand market for and access to goods and services
  • Cities – as trade grew, so did the marketplace
  • Concepts of wealth and numbers – personal and governmental planning
  • Writing – understandable system of accurate recordkeeping
  • Double entry bookkeeping – associated with birth of Italian Renaissance
  • Money and banking – helped businesses avoid bankruptcy in Industrial Revolution

Father of Accounting
The history of accounting is not complete without Luca Pacioli (1445 – 1517), also known as Friar Luca dal Borgo and the “Father of Accounting”. Pacioli is credited for the “birth” of accounting. In 1494, he wrote a textbook that was a compilation of the mathematical and accounting knowledge of his time. His textbook provided the first printed description of the double-entry accounting system used by Venetian merchants in the late 15th century including a similar accounting cycle as we know it today. The system described journals and ledgers with sections for assets, liabilities, capital, income, and expenses found on the modern accounting balance sheet.

Modern Accounting
As civilisation evolved, businesses grew and so did capital markets and with that…accountability. Successes depended more and more on accurate and dependable financial documents. Through time, the role of the accountant has become an integral part of almost every aspect of day-to-day business and governmental regulation. The history has led modern accounting to become a global, real-time integrated information system driving the direction of accounting expertise and emphasis on the importance of the accounting profession.

Accounting established itself even further during the Industrial Revolution, and the accounting history of this period is fascinating indeed, as the pioneer of accounting during the Industrial Revolution was none other than the potter Josiah Wedgwood, whose family firm still dominates the market for luxury fine china and crystal.

Wedgwood, as attuned to the bottom line as he was to the quality of his wares, demanded that proper records be kept so that he was able to easily detect and remedy minor inefficiencies and cost overages as well as to quickly deal with such potential calamities as the embezzlement he once discovered when reviewing the meticulous financial records for which his enterprise became renowned. Wedgwood is as much a part of accounting history as he is of production history because of the efficiency of his cost accounting methods, which were adopted by other successful industrialists of his time.

The railroads also depended on proper accounting techniques so that they could fulfil their role as the transport lifeline of the Industrial Revolution. Given the avaricious nature of some of the railroad barons of the United States during the expansion of railroads there, it can probably be assumed that the history of accounting scandals began with the methods used by these robber barons to outwit investors, customers and the onset of regulatory pressures alike.

By the beginning of the 19th century, “accomptants”, the predecessors of today’s skilled and trained outside accountants, began to appear in London, and a similar profession would arise in the Americas as well due to industrial development there. Often, bankruptcy was the reason that firms turned to these pioneers of independent accounting history.

And in 1845, when William Deloitte opened his London accountancy firm, the modern outside accounting and auditing profession were clearly a part of British business procedure, which at the time led the world in terms of advancement and transparency. His firm, like that of Wedgwood, lives on, and today Deloitte is the trademark of the international giant Deloitte (Deloitte Touche Tohmatsu) that evolved from the first major firm in accounting history.

For all your accounting, taxation and Accounts Payable needs, feel free to visit this site www.kilcoyneacccountants.ie, either via email, over the phone or in person. Whether its business or personal taxes, accounting services―it is what we do! We will more than be dedicated in helping you and in growing your business by offering real time financial information utilizing the most updated technologies. We are here for you all year round!

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