Accounting

Accounting

Accounting

Introduciton

The “Enron stage of capitalism” (Prashad, 2002) shows how an accounting scandal, with serious significances for economic describing and regulation, may also be an exemplar of the political and economic methods ruling the evolution of international capitalism. Accounting is, as the arguments reviewed underneath show, fundamentally implicated in the development of capitalism through all its phases of development, notwithstanding how these are marked and defined. Accounting annals is therefore more than easily notes the evolution of a set of mechanical methods beginning with Paccioli's Summa de Arithmetica, Geometria, Proportioni et Proportionalita in 1494 and ending with the newest statement of the economic Accounting measures Board. Instead, accounting is implicated in transformations in ownership, with war and social upheaval, as well as with more steady phases of capitalist development. As these connections have been progressively accepted, historical perspectives have begun to live at a important place inside the control and respect of accounting itself, set inside a broader interdisciplinary social research research agenda, employing the full range of methodological perspectives. This application provides an overview of the alternate advances employed and the arguments that have arisen. It ends with a summary of their contribution to our understanding of financial reporting within its social and historical context.

Background

Accounting history, like all history, might be said to have historical explanation as its objective (Keenan, 1998, 15). Historical analysis might therefore be employed to trace the first use of accounting techniques, perhaps the earliest example being the household economy and private estates of ancient Egypt, dating back to the Middle Kingdom, thereby providing context for their present-day use (Ezzamel, 2002, 2).

An early and important example of accounting being used to define the key features of a specifically capitalist enterprise dates back to Sombart in 1915, who argued that double entry bookkeeping (DEB) allowed the essential ideas of the capitalistic economic system to be fully developed: the creation of economic wealth and economic rationality as applied to business calculations (Most, 1979, 203). Sharing the “whig” interpretation prevalent in the wider discipline of history, early accounting historians believed there was a progressive development of accounting techniques from their DEB origins (e.g., Littleton, 1933).

The chief characteristics of “traditional” accounting history - economic rationality, history as progress, and an excessive focus on DEB - form the basis of subsequent critiques and in turn a reference point for subsequent developments in accounting history. Yamey (1964) questioned the “Sombart thesis,” arguing that there was no substantial evidence for the utility of DEB from the perspective of capitalistic economic decision-making. Pollard (1965), with reference to a large number empirical studies, confirmed that many entrepreneurs in the industrial revolution had neither the ability nor the access to sufficient expertise to set up accounting systems that would have provided the basis for rational calculations.

While maintaining the central assumption of economic rationality, Watts and Zimmerman in a series of studies developed the positivist approach to consider aspects of financial reporting beyond mere DEB.

For example, they recognized that principal-agent theory and efficient market theory, ...