HISTORY OF ACCOUNTING

History of Accounting

Table of Content

Introduction2

Discussion2

Accounting in Ancient Times2

Industrial Revolution and Britain4

Cost Accounting5

Auditing & Emergence of Accounting as Profession5

Accounting in America6

Regulation and Establishment of Accounting Standards6

Conclusion7

History of Accounting

Introduction

Accounting is not a recent concept but it has been there since the beginning of civilization. However, the present form of accounting was acquired in early 20th century. Before, one shred eye can find it in different forms present in different geographical locations, at different times in history and associated with different other professions. The history of accounting is as fascinating as history of any other field. Historical chronicles shows that accounting concepts have evolved as the cities and trade process developed. Accountants introduced the concept of money and banking as well as double entry bookkeeping that subsequently led to the Italian Renaissance. The profession of accountants developed significantly during the industrial revolution. This field also contributed to the maturity of confidence in capital market system which ultimately became the foundation stone and backbone the whole capitalism. During the information revolution, with the aid of computerization, it has fueled the transformation of worldwide economy.

Discussion

Accounting in Ancient Times

The history of accounting can be traced back to the use of tokens in ancient cities of Babylon. These tokens, usually small clay balls, used to represent different items; circled token represented sheep and spheres represented grain. The first accounting records were as old as 7500 BC when tokens were used for agricultural and barbering. As the civilization progressed, accountancy system progressed. From 7500 to 3200 BC, accounting concepts evolved as the needs become complex. Abacus, the first calculator, was invented in China in 3000 BC. In 2200 BC, for the first time standard weigh and measure system was introduced with the name of Code of Hammurabi. Coins invented in 7 BC and system of coins improved on and later, they started appearing with stamps. Around the same time, the concept of money came in because early system of barter exchange could no longer support the growing need of trading. Trade was the most imperative reason for development of coins and state government was also providing some assurance regarding quality and value of the first currency form(Giroux, 1999).

By 575, Greek banking system was developed and formal financial transactions were carried out using minted coins. Rome republic emerged as the great and dominant empire of the world. They adopted coinage, Greek Alphabets, the abacus, and banking & credit which resulted in a sophistical financial and legal system. Roman Empire used this system for tax collection trade, contracts, and a gigantic bureaucratic network. After the fall of Roman Empire in 5th Century AD, the Dark Age prevailed in the whole Europe till 1000 AD until the arrival of Crusades which, once again, contributed to the progress of accounting system in particular and banking system in general, as the demand rose to finance the armies.

Subsequently, demand for exotic goods from East expanded. Italian Merchants enlarged the trading network throughout ...