History of accountancy

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Gallery about the history of accountancy

Origins[edit]

Early civilizations[edit]

Centres of origin and spread of agriculture.svg

Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia amongst the ruins of ancient Babylon, Assyria and Sumeria The people of that time relied on primitive accounting methods to record the growth of crops and herds. Because there is a natural season to farming and herding, it is easy to count and determine if a surplus had been gained after the crops had been harvested or the young animals weaned. Accounting evolved, improving over the years and advancing as business advanced.

Antiquity[edit]

The Res Gestae Divi Augusti (Latin: "The Deeds of the Divine Augustus") is a remarkable account to the Roman people of the Emperor Augustus' stewardship. It listed and quantified his public expenditure, which encompassed distributions to the people, grants of land or money to army veterans, subsidies to the aerarium (treasury), building of temples, religious offerings, and expenditures on theatrical shows and gladiatorial games. It was not an account of state revenue and expenditure, but was designed to demonstrate Augustus' munificence. The significance of the Res Gestae Divi Augusti from an accounting perspective lies in the fact that it illustrates that the executive authority had access to detailed financial information, covering a period of some forty years, which was still retrievable after the event. The scope of the accounting information at the emperor's disposal suggests that its purpose encompassed planning and decision-making.

Early accounting systems[edit]

The Heroninos Archive is the name given to a huge collection of papyrus documents, mostly letters, but also including a fair number of accounts, which come from Roman Egypt in 3rd century AD. The bulk of the documents relate to the running of a large, private estate is named after Heroninos because he was phrontistes (Koine Greek: manager) of the estate which had a complex and standarised system of accounting which was followed by all its local farm managers.

Each administrator on each sub-division of the estate drew up his own little accounts, for the day-to-day running of the estate, payment of the workforce, production of crops, the sale of produce, the use of animals, and general expenditure on the staff. This information was then summarized as pieces of papyrus scroll into one big yearly account for each particular sub—division of the estate. Entries were arranged by sector, with cash expenses and gains extrapolated from all the different sectors. Accounts of this kind gave the owner the opportunity to take better economic decisions because the information was purposefully selected and arranged

Medieval[edit]

Modern history[edit]

Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest.

Renaissance[edit]

In the 15th century double-entry bookkeeping was first codified by the Franciscan Friar, Luca Pacioli. In deciding which account has to be debited and which account has to be credited, the golden rules of accounting are used. This is also accomplished using the accounting equation: Equity = Assets − Liabilities. The accounting equation serves as an error detection tool. If at any point the sum of debits for all accounts does not equal the corresponding sum of credits for all accounts, an error has occurred. It follows that the sum of debits and the sum of the credits must be equal in value.

People on the job
Documents
Bookkeeping system by Johann Gottlieb, 1546
Gottlieb's book about bookkeeping, 1546

Johann Gottlieb was a merchant from Nuremberg, who traded in Venice. He wrote a treatise on double-entry bookkeeping in 1531, and an other book in 1546 both published at Nuremberg. These were the first books on bookkeeping in Germany and popularized the system of double-entry bookkeeping in Northern Europe. In his 1531 book Gottlieb mentions that there are different kinds of businesses and different kinds of systems of bookkeeping, meaning that there are various ways to arrange accounting records (Lee, 1990 p.364)

17th century[edit]

People on the job
Documents

18th century[edit]

People on the job
Documents

19th century[edit]

The development of joint-stock company created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information. This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors.[

People on the job[edit]

Documents[edit]

See also Category:Ledger of the fur trader Dedo in Leipzig, 1876-1885

Books about bookkeeping[edit]

Invoices[edit]

Invoice forms in the 1870s started to bear fine images of the the companies factory, office-building and/or sales facility. An early example of an illustrated invoice is the Adler Rechnung Stephenson 27081835, an invoice from 1833 for the first steam locomotive in Germany Adler of the Bavarian Ludwig Railway, made out from the locomotive manufacturer Robert Stephenson and Company.

20th century[edit]

People on the job[edit]

Automation[edit]

Documents[edit]

Invoices[edit]

1900s
1910s
1920s
1930s
1940s
1950s

21th century[edit]

Diagrams
Accounting software screenshots
Locbook Master menu

Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.

References[edit]

This gallery incorporates material from Wikipedia articles on: accounting, accounting software, and double-entry bookkeeping system.

  • Thomas Alexander Lee (1990) The Closure of the accounting profession - Volume 1.

See also[edit]