Accounting

A History of Accounting

Kaitlyn Roberts

University of Maryland University College

Accounting 321

Introduction

As long as there have been businesses operating there has been a need to keep track of transactions. From inventories to liabilities due to others, an accurate log of transactions has been very important. Conceptually, accounting has been established since man began trading, but the evolution of accounting to where we are today has been a long journey. With more and more need for accurate accounting today, it is important to see where the techniques we use every day came from.

Ancient Accounting

Accounting records have been traced back to ancient Mesopotamia circa 3500 BC (Alexander, page 5). In a time where literacy was very limited, keeping accurate records of transactions was difficult. Similar to accountants today, early accountants would also have the duty of a scribe including writing up the transaction and ensuring agreements complied with code requirements. This was not as simple as it is today though. In order to record contracts and transactions scribes would , “…moist clay was molded into a size and shape adequate to contain the terms of the agreement” (Alexander, 2002, p. 5). After this process was done, a carbon copy was made out of the mold. It is impressive to think that this technique of creating carbon copies was developed thousands of years ago and is still in use today, albeit with modern techniques.

Egyptians also kept extensive accounting records, but their accountants had the advantage of better materials. Instead of using the tedious process of molding clay to write a contract, Egyptians were able to use papyrus to keep logs of accounting records. They even had the first from of internal auditing, “These early accountants had good reason to be honest and accurate, because irregularities disclosed by royal audits were punishable by fine, mutilation or death” (Alexander, 2002, p. 6). It might be interesting to see how modern day accountants would handle ethics issues if these were still the punishments! While Egyptians were good at tracking the movements of trades, they still did not have a form of currency, which made computing the total of all transactions difficult.

It was not until the 5th century B.C. when the Greeks invented a form of coin that accounting began to evolve into what we are more familiar with today. With the use of coin instead of purely trading goods and services, accountants were able to log transactions and summarize them over periods of time. They were able to analyze annual expenditures and even create budgets. In ancient Rome, families were required to keep track of all expenditures, assets and liabilities and report them to the government for taxation purposes and to determine voting rights (Alexander, 2002). This is clearly the foundation of our current day taxation system for individuals in America.

Medieval Accounting

Medieval accounting took place during the transition period from a pure barter system to using coin for transactions. The Roman Empire’s accounting system was very widespread across their entire population; all citizens were required to comply with the same set of standards. In medieval Europe each kingdom had its own accounting rules that were to be followed. Also an important difference that should be noted is the goal of account keeping in medieval times. Rulers were concerned with maintaining citizens in their correct socio-economic positions (Alexander, 2002). Payments were recorded on a tally stick based on the number of pounds paid. This system was good for providing proof of payment of taxes. The English did keep a written record of their accounting as well. The oldest known accounting record kept in the English language is the Doomsday Book (Alexander, 2002). This book kept record of all real estate and taxes due on the properties. This is similar to today’s methods of valuing properties and assessing taxes as the responsibility of counties and cities, instead of the federal government.

The Father of Accounting

Luca Pacioli is widely regarded as The Father of Accounting, though it should be noted that he should probably be called the Father of Modern Accounting, as shown above accounting has been taking place for thousands of years before him. Pacioli was an Italian mathematician and friar (Smith, 2011). In 1494 Pacioli wrote the book Everything about Arithmetic, Geometry, and Proportions, which contained a section detailing double-entry accounting (Smith,

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