CHAPTER 1 – INTRODUCTION TO ACCOUNTING

History of Accounting
1. Accounting as a language of business, as old as civilization. It evolves in response to economic and social needs of
men. It is started as simple of recording repetitive exchanges.
2. Accounting played a vital role when money, banking, and credit were invented.
3. Around 3600 BC record-keeping was already common from Mesopotamia, China, India and Central America. The
oldest evidence of this practice was the clay tablet of Mesopotamia, 90% of which dealt with commercial
transactions. Tithes to ruling theocratic class were faithfully recorded in many occasions.
4. Simple accounting is mentioned in the New Testament. The Quran also mention simple accounting for trade and
credit arrangements.

Evolvement of Double-Entry System

1. In Genoa, the oldest double-entry books entitled Massari (Treasury Officials) Ledgers of Commune of Genoa were
written in 1340. These books were known as a perfect double-entry form because separate pages were used for
debit and credit
2. In Florence, there were double-entry records wherein debits were written over credits. Florentine Method is
observed in the Journal Entries with double-entry bookkeeping.
3. Venice of Northern Italy had key influence in the use of double entry system in 1400s.
4. In 1949, Luca Pacioli, an Italian monk and mathematician wrote Summa de Arithmetica, first book that was
published containing detailed chapter of double entry bookkeeping. Pacioli introduced three important books of
records, Memorandum book, Journal book and Ledger book.