History &

Development
of Accounting
 4000 B.C.
The income of temples was
recorded in lower
Mesopotamia.

2500 B.C.
Historical accounting records
had been found in ancient
civilizations of Egypt and
China.
 1000 B.C.
Phoenicians created an
alphabet with accounting
so that they were not
cheated through trades with
the ancient Egyptians.

500 B.C.
Egyptians carried on with
accounting records and even
invented the first bead and
wire abacus
 423 B.C.
The auditing profession was born to double check storehouses as to
what came in and out the door. The reports that were taken by these
accountants were given orally hence the name “auditor”

10 B.C.
Emperor Wang Mang (45
B.C. to 23 of Xin
Dynasty) of China
instituted the first known
income tax at a flat rate
of 10% of profits.
 1200 to 1493
In 1300, accountants were
mentioned in historical records for
the firm time in the State of
Westminster indicating they are
considered important.

The first requirement for businesses

to keep accounting records spread
across many of Italian Republics in
the 13th century. These records
were mainly taken to keep track of
the day to day transactions and
credit accounts with other
businesses.
 1200 to 1493
In 1327, early books from the
commune of Genoa displayed an
early form of bookkeeping. The
oldest double-entry books entitled
“Massari (Treasury Officials)
Ledger of Commune of Genoa”
were written in 1340. In today’s
accounting system, this is
simplified into T-account and
expanded into the ledger.
 1200 to 1493
In Florence, writing debit over credits accounted for its double-entry
recording. In today’s accounting system, this is similar to preparing
journal entries.

In 1400, the Italian trading period saw sophisticated accounting

systems developed within banking houses. Double-entry bookkeeping
was discovered.
 1200 to 1493
During this period,
there were two
prevailing approaches
to reporting. These
were the Florentine
approach (journal
entries) which was
introduced by Amatino
Manucci and the
Venetian approach
(ledger posting) which
was introduced by
Andrea Bargarigo.
 1494
Luca Pacioli, the father of modern, wrote his famous paper “Summa de
Arithmetica, Geometria, Proportioni et Proportionalita” The treatise that he
wrote was mainly a study that Pacioli performed on the practices of
merchants in Venice, Florence and Milan. He revealed that several
merchants kept books of debits which meant “he owes” as well as credits
which meant “he trusts.” With this early double-entry accounting system
merchants were able to maintain records so that they could improve the
efficiency of their business. With these records came the primitive income
and balance sheet statements.
 1500 to 1700
As the time progressed, large
and small innovations were
added to the double-entry
records. For example, the
East India Company
developed invested capital
and dividend distribution
during the 17th century. This
also created the need for a
change in financial
accounting and managerial
accounting. The first for
presentation to gain investors
and the next was used so that
business could be run as
efficiently as possible.
 1500 to 1700
Jacques Savary, in his Commercial Code
of France (1673), used historical cost as
the basis of valuation.

1700 to 1900
During the Industrial Revolution,
according really took off as industrial
companies sought out to gain financing
and maintain efficiency through
operations. Several of the double-
entry accounting methods was truly
developed in this area as there was a
focus on business as never before.
Shortly after the first accounting org.
was developed in New York in the year
1887.
 1700 to 1900
Napoleon Bonaparte, in his
Commercial Code (1804) and its
supplement Code of Commerce of
France (1807), asserted that assets
must be carried at their market value
and not based on historical cost.

Eugene Schmalenbach utilized price

level accounting as the basis of
valuation.
 1913
The first income tax law in the
Philippines as enacted.

1920 to 1940
Accounting in 1920s became
important to reduce the amount of
fraud and scandals that were
performed in businesses, particularly
in the United States of America
(USA).

In 1923, the first Accountancy Law

(Republic Act No. 3105) in the
Philippines was passed. This law
created the Board of Accountancy
(BOA).
 1940 to 1970
Globalization of business
resulted in diverse accounting
practice around the world.
Thus, the need for
harmonization.

In 1967, the Accountancy Law

in the Philippines was revised
and passed under Republic Act
No. 5166. This law
standardized the accounting
education and regulated the
practice of accountancy. This
law also spelled out the
examination process of CPA
registration.
 1973
The International Accounting Standard Committee (IASC) was created
through an agreement made by professional accountancy bodies from
Australia, Canada, France, Germany, Japan, Mexico, the Netherlands,
the United Kingdom and Ireland, and the USA. Headquartered in
London, United Kingdom, the committee is an independent private sector
body, with the objective of achieving uniformity in the accounting
principles which are used by business and other organizations for
financial reporting around the world. The pronouncements were
designated as International Accounting Standards (IAS).
 1975
In the Philippines, the Accountancy Law was revised and passed under
Presidential Decree No. 692.

1981 to 1996
In 1981, the Philippine Institute of
Certified Public Accountants (PICPA)
created the Accounting Standards Council
(ASC) to establish and improve
accounting standards generally accepted
accounting principles.

Until 1996, most if not all, of Philippine

accounting standards, called Statement of
Financial Accounting Standards (SFAS),
were based on accounting standards in
the USA.
 1997
The Philippines started transitioning from applying American accounting
standards to applying IAS.

2001
The International Accounting Standards
Board (IASB) succeeded IASC. It has still
adopted body of standards by the IASC
but moving forward, all standards were
designated as International Financial
Reporting Standards (IFRS).
 2002
The European Union (EU) required all EU listed companies to adopt IFRS
starting 2005.

2004
In the Philippines, the Professional Regulation Commission (PRC)
created Financial Reporting Standard Council (FRSC). This replaced the
ASC and was created to assist the Board of Accountancy (BOA) to carry
out its powers and functions provided under Republic Act No. 9298, the
Philippine Accountancy Act of 2004. Complimenting IAS and IFRS were
the Philippine Accounting Standards (PAS) and Philippine Financial
Reporting Standards (PFRS).
 2004
Republic Act No. 9298, an act regulating the practice of Accountancy in
the Philippines, repealing for the purpose Presidential Decree No. 692,
otherwise known as the Revised Accountancy Law, was also passed and
enacted in this year.

2005 to present
The Philippines became fully
compliant with IFRS.