UNIT I

HISTORIC BACKGROUND OF ACCOUNTING

 TOPIC 1. READING

Man, since early times, has struggled to satisfy his requirements for making a living. Little by
little, these requirements became greater, and the interchange of goods among individuals
was necessary. 

As a result of this, trading began to appear. Simultaneously, numerical records of some kind

began to arise, too.

Evidences of the above statement are the discoveries made by archeologists, such as bricks
inscribed in cuneiform characters in Babylon, detailed accounts for farms and states, in
Greece and Rome and the tribute-roll of Moctezuma, in pre-Columbian North America. This
roll gave an account, in a pictorial way, of beadwork, feather work, weapons, and food,
which constituted the tribute of other Mexican nations to Moctezuma.

Nevertheless, these and many similar records are not accounting records in the
modern sense. Accounting, from the modern accountants’ point of view, really began with
the development of the commercial republics of Italy.

Massari of Genoa, in 1340, was the first to keep double entry books, this information being
contained in Edward Peragollo’s book Origin and Evolution of Double Bookkeeping.

However, the first printed text, containing accounting and including the double
entry system, known to exist is that of Luca Paccioli (1445-1514), Summa de
Arithmetica, Geometria, Proportione e Proportionalitate.

Paccioli was a true representative of the scientific culture at the time of the
Italian Renaissance. He taught at monasteries, universities, and royal courts, and he
wrote the book in 1494.

Some centuries later, in 1776, the industrial revolution arose beginning in Great Britain. A
series of inventions in a large number of industries took place. It then became necessary to
improve accounting techniques and systems and establish new ones.

At present, changes in political and economic organizations based upon the interests and
needs of society, have given rise to an important increase in technology.

So far as accounting is concerned, a new system of data processing, based on

accounting principles and accomplished by means of electronic computers, has been used in
recent years. “Data” is a synonym for “information” and “processing” is a synonym for
“handling”.

 Nowadays, a great number of institutions of various types use this system.