History of Accounting

For some, the first name that might come to mind when
referencing early accounting history is Luca Pacioli. Pacioli described double-entry
bookkeeping in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita”
back in 1494. While that may sound like a long time ago, accounting may have roots
that trace back even earlier. Accounting has been around for centuries. It’s a critical
part of the business, record-keeping, and life in general. The first record of accounting
occurred thousands of years ago in Mesopotamia and has evolved into the intricate
element of business and life that it is today. Below is an informative guide that
explores a short history of how accounting has evolved over thousands of years.

Earliest Record of Accounting

The earliest accounting records were found over 7,000 years ago among the ruins of
Ancient Mesopotamia. At the time, people relied on accounting to keep a record of
crop and herd growth. They used accounting techniques that are still used today to
determine if there was a surplus or shortage after crops were harvested each season.

Accounting History During the Roman Empire

 Later, during the reign
of the Roman Empire,
accounting continued
to evolve much
further. “The Deeds of
the Divine Augustus”
is an account of
Emperor Augustus’
financial dealings. It
listed such quantities
as distributions to the
people, grants of land, building of temples, money to military veterans, religious
offerings, and money spent on theatrical shows and gladiator events. This discovery
hints at the scope of accounting information available to the emperor, which he then
probably used for planning and decision-making purposes. Roman historians also
recorded public revenues, the amount of money in the state treasury, taxes, slaves,
freedmen, and more.

Luca Pacioli’s Contribution to the Accounting

Profession

In 1494, Pacioli wrote Summa de Arithmetica, Geometria, Proportioni et

Proportionalita, which included a twenty-seven-page treatise on bookkeeping titled,
Particularis de Computis et Scripturis (Details of Calculation and Recording) on the
subjects of record keeping and double-entry accounting. Pacioli’s book became the
reference text and teaching tool on the subjects of bookkeeping and accounting for
the next several hundred years. This was the first time that symbols for plus and
minus appeared in a printed book. This book was the first known published work on
the topic of double-entry bookkeeping. Summa Arithmetica was also the first known
book printed in Italy to contain algebra.

Accounting basics are also mentioned in the New Testament of the Bible in the Book
of Matthew as well as in other religious texts such as the Qur’an.

Accounting During the Middle Ages

During the
Middle Ages, bartering was the primary form of money-changing, but when Europe
changed to a monetary economy is the 13th Century, merchants began relying on
bookkeeping to keep a record of multiple transactions. This is when double-entry
bookkeeping got its start, which is when a debit and credit value is entered for each
transaction by the accountant. Merchants at the time used accounting as an ad-hoc
ordering system. It provided them with constant information about their businesses
that they could use in decision-making to grow their business as they saw fit. This laid
the foundation of how we use and understand accounting today.

Accounting Methods Today

Nowadays, there are accounting standards, auditing regulations, and ethical

standards for accountants to follow. Accountants and their peers handle the monetary
ebb and flow of the economy. Obviously, they are not the only people responsible for
this, but they play a huge role. Each business, company, corporation, government,
and an individual must use at least basic accounting principles during their life, and
often during their daily activities. It’s an important element of business and over
thousands of years has evolved into what we know as in modern accounting today.