History of Bookkeeping and

Accounting
The Ancient World
Medieval Developments
Industrial Revolution
Scribe - Sakkara about 2500 BC (Louvre)

The Near East Cradle of Civilization
Ancient Names
Sumeria
Assyria
Mesopotamia
Babylon
Persia

Dawn of Civilization
Transition from
hunter/gather to
farmer
Jordan River Valley
Jericho Oldest
fortified city
discovered so far
Artifacts date back
some 10,000 years!

Jerry of Jericho
The First Inventory
Who was the first
accountant?
Someone who
needed to keep
track of what was
stored in temple or
kings granary?
Must writing come
before record
keeping?

Scribe - Sakkara about 2500 BC (Louvre)

Which came first writing or numbers?
Dr. Gunter Dreyer of the German Institute
of Archaeology is perhaps the most
prominent of a number of archeologists
who believe that writing actually
developed out of early marks that were
used to tally the kinds and amounts of
goods in stock at ancient warehouses
Earliest writing = inventory control!
Dr. Dreyer recently discovered
numerous inscribed bone
labels attached to bags of oil
and linen in the tomb of King
Scorpion I at Abydos, Egypt.
The labels date back 5300
years, are the world's earliest
known writing, and describe
inventory owners, amounts,
and suppliers.
One of the Oldest Professions!
In ancient Egypt, the accountant
was called the "eyes and ears" of
the king.
Simple Token System
Simple token
system did not
require abstract
concepts of
numbers, writing
or money!
Token system
expanded used
as evidence of
transactions
Clay envelopes
date from around
4000 BC in
Sumeria
Envelope & tokens - Susa, 3300 BC (Lourve)

Accounting pre-dates writing!
Complex tokens evolved about 3700
BC
Use of lines, notches and other
markings used as abstract
representations of wealth and the
development of numbers
Evolved into
cuneiform

Accounting records on pre-cuneiform tablet (Louvre)

Cuneiform Collection SMM 7
Translation:
1. 3 acres barley, for harvest,
2. Field of the Ash Trees
3. Dada, the swineherd
4. Seal(Ed by) Lugal-ema e
5. Month of barley harvest,
6. year Huhnuri was destroyed.
This tablet is a
receipt for beer,
sealed by a clerk
named Umani.
Sealing Tablets
Source: - Science Museum of Minnesota
http://www.smm.org/research/Anthropology/cuneiform/sealing.php
Babylonia Base 60 numerals
Here are the 59 symbols built from
just two symbols

Ancient Egyptian Numbers



Zero had not yet
been invented
Sticks & Strings
Other
accounting
systems for
illiterate ages
and societies
The Inca Quipu
The Inca (unlike the
Maya and Aztec) had
no true form of writing

Tally Sticks
These sticks recorded expenses for illiterate servants and
masters. As money or goods changed hands, the tally
sticks were carved with v-shaped grooves for "pounds,"
rounded grooves for "shillings," and slices for "pense."
At the end of a transaction, the stick would be split
lengthwise and divided between the debtor and the
creditor until the debt was paid.

Invention of Money
http://www.med.unc.edu/~nupam/ancient1.html

First coin of India (?)
Before 5th Century BC
Minted in Madhyadesha?, found near Mathura
Silver unit Seven punch marks
Weight: 7.14 gm
Numismatic Digest # 22
Rare

Coins appear to be a simultaneous but
independent development at about the
same time in China, India, and Greece
Invention of Coins around 630BC
Castulo AE30. Augustus' (?) portrait right / Helmeted Sphinx right, star
before, Iberian legend in ex. - photos from
http://www.wildwinds.com/coins/sg/sg0015.html

Ancient Greece
The public economy
of the Athenians had a highly
developed system of accounting
& auditing
Treasurer or manager of Public
Revenue
Accounts kept by clerks and
controlled by checking clerks
Accountability assured by public
exposure of accounts on stone

Ancient Rome
Practices of private life led to public
accounting process
Transactions were first entered in a day
book (memorandum or adversaria in
Latin)
Monthly, the entries were transferred to
the ledger (codex tabulae)
The codex could be used in court to
substantiate contracts and claims
In government separation of
responsibilities

China
Accounting largely used to evaluate
efficiency of governmental
programs and civil servants
To date, no evidence of double-
entry bookkeeping before
introduction from west in 1800s
The Rise of Double Entry
Crusades demand for exotic goods
Genoa-Venice-Florence: A
Commercial Revolution
Littletons Antecedents of Bookkeeping
1. Private property
(power to change
ownership)
2. Capital
(wealth productively
employed)
3. Commerce
(exchange of goods)
4. Credit
(present use of future
goods)

5. Writing
6. Money
7. Arithmetic

The antecedents then
require:
A methodology (a plan to
systematically rendering the
material into the language)

The Father of Accounting:
Fra Luca Pacioli
He was born in 1445
in Sansepolcro, Italy.
A dedicated
Franciscan, he
showed a passion for
mathematics
Did not invent double
entry but wrote the
most influential early
textbook
Traditional
1494 The Summa
The treatises official
title: "Summma de
Arithmetica, Geometria:
Proportioni et
Proportionalita"
One section of the book
was devoted to methods
of recording merchant
transactions, including
ideas about double-entry
bookkeeping.
Numbers in Medieval Bookkeeping
Even though the Italian merchants
calculated with Arabic numerals as early as
the 13th century, Roman figures dominated
in their account books until the late 15th
century (but with decreasing frequency).
Use of Roman numerals persisted in northern
Europe even longer as double entry moved north
gradually
The prolonged use of the old writing style
is mostly explained by with the general
belief of the contemporaries that the
Roman were forgery-proof.
Sombarts Theory (1924)
Double entry bookkeeping was
such a powerful tool that it
made possible the new social
and economic system which we
call capitalism

chicken and egg arguments!

Rise of Cost Accounting
Josiah Wedgwood Entrepreneur &
Cost Accountant
1770-2 financially difficult times with
dropping demand and rising inventories
Found head clerk had been embezzling
Began looking at costs of materials and
labor & allocated overhead costs
Discovered economies of scale
importance of volume
Started differential pricing elite vs.
mass-market
New manufacturing equipment introduced

The Abacus
The Abacus is an ingenious counting device based on
the relative positions of two sets of beads moving on
parallel strings. The first set contains five beads on each
string and allows counting from 1 to 5, while the second
set has only two beads per string representing the
numbers 5 and 10. The Abacus system seems to be
based on a radix of five. Using a radix of five makes
sense since humans started counting objects on their
fingers.

http://www.xnumber.com/xn
umber/mechanical1.htm00
The Exchequer
in British history, the government
department that was responsible for
receiving and dispersing the public
revenue. The word derives from the
Latin scaccarium, chessboard, in
reference to the checkered cloth on
which the reckoning of revenues
took place.
Technology Changes Whats Possible
in Accounting
William Seward
Burroughs
invented and
patented the first
workable adding
machine in 1885 in
St. Louis, Mo.
Production
increased
dramatically after
1900