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History of Accounting
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This lecture note will help the students to understand the history of accounting in different periods.
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HISTORY OF ACCOUNTINGAccounting is as old as civilization itself. It has evolved in response to various
social and economic needs of men. Accounting started as a simple recording
of repetitive exchanges. The history of accounting is often seen as
indistinguishable from the history of finance and business.
Early Development in Mesopotamia
• Following is the evolution of accounting:
Old Ancient (4000 B.C)
• Mesopotamia Ancient (2500 B.C)
• Egypt (Trade)
• China (Tax collection)
Following is the evolution of accounting:
The Cradle of Civilization
Around 3600 B.C., record-keeping was already common from Mesopotamia,
China and India to Central and South America. The oldest evidence of this
practice was the “clay tablet” of Mesopotamia which dealt with commercial
transactions at the time such as listing of accounts receivable and accounts
payable.
• Following is the evolution of accounting: (1000 B.C)
• China – Emperor Wang Mang (Xin Dynasty)
• He used accounting in getting the inflation rate of income and taxes.
Development in the Roman Empire
• The reign of Emperor Augustus (63BC-14AD) provided more evidence
about the development of accounting.
• The Roman government kept detailed financial information of the deed
of Emperor Augustus regarding the stewardship of Roman resources.
• Roman historian Suetonius and Cassius Dio recorded that in 23BC,
Augustus prepared rationarium (account) which listed public revenues,
the amounts of cash in the aerarium (treasury), in the provincial fisci
(tax officials), and in the hands of the publican (public contractors);
and that it included the names of the freedmen and slaves from whom
a detailed account could be obtained.
14th Century - Double-Entry Bookkeeping (Italy)
The most important event in accounting history is generally considered to
be the dissemination of double entry bookkeeping by Luca Pacioli (‘The
Father of Accounting’) in 14th century Italy. Pacioli was much revered in his
day, and was a friend and contemporary of Leonardo da Vinci.
• Most important event in accounting history
• The Italians of the 14th to 16th centuries are widely acknowledged as
the fathers of modern accounting and were the first to commonly use
Arabic numerals, rather than Roman, for tracking business accounts.
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