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practices and institutions in response to changes in the environment and social needs. . It also considers the effect that this evolution has worked on the environment‟ (Belkoui.Accounting history is defined as „the study of the evolution in accounting thoughts. 1983).

some of the oldest written languange.Scribes formed the “pivots on which the whole machinery of treasury and other departnment turned.manager of great estate of Appolonius.Producers of the first organized gov in the world.introduced in 256 BC an elaborate system of responsibility accounting CHINESE CIVILIZATION Gov accounting playing a key and sophisticated role during chinese civilization.AND SUMERIAN CIVILIZATIONS .ROMAN CIVILIZATION Law requiring taxpayers to prepare statement of their financial position. . Where zenon.ASSYRIAN. SCENARIOS PRESENCE RECORD KEEPING GRECK CIVILIZATION EGYPTIAN CIVILIZATION . CHALDEAN BABYLONLAN.oldest surviving biz records.

the introduction of Arabic numerals .the rise of literacy -the existence of standard medium exchange  The first double entry books known to exist are those of Massari of Genoa. . The presence of bookeeping in the ancient has been attributed to various factor : .invention of writing .dating back from year 1340. It also fair to mention that a rudimentary form of double entry accounting existed among the ancient Incas 1577.This double entry bookeeping preceded Paciolo by some two hundred years.presence of inexpensive writing material .diffusion of knowledge algebra .

Geometria.LUCA PACIOLI’S AND DOUBLE ENTRY BOOKEEPING IN 1494. "Summa de Arithmetica. He also advise close the books each year and frequent acounting makes for long friendship .you must make someone debtor He suggest not only was the name of the buyer o seller recorded.de computis et Scripturis decribing double entry bookeeping.but described what was being practiced at the time . All entries have to be double entries. He did not invent double entry bookeeping . he published his book.as well as description of the goods with its weight. Proportioni et Proportionalità“ which include two chapter.size and term of payment were also shown.that is.The purpose bookeeping “ to give the trader without delay information as to his assets and liabilities “. if you make one creditor.

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4)Seventeenth century .1) Sixteenth century – introduction of specific journals for the recording of diiferent type of transaction .Use of specialized subsidiary transaction and types of expenditure. 2)Sixteenth & seventeenth .evolution of the practice of period financial statement. Purpose-keep detail out of the journal and also the ledger to avoid filling them up too quickly. .application of the double entry system was extended to other types of organization . good in partnership and voyage account.Example: various good account together with other goods consignment account. 3) Seventeenth century .separate inventory accounts for diiferent types of goods.personification of all account and transaction to rationalize debit and credit rules that are applied to I impersonal and abstract account.

.diiference between revenue payment and receipts .the existence of depreciation method.periodicity and accrual.sinking fund and annuity method.entered in asset a/c .reducing method.While still not heavily used .beginning with East India Company following industrial revolution .diiference between total debit and total credit is carried forward as the account balance.5) Seventeenth century .straight line.the revised value carried forward in the account and balancing difference is carried to profit and loss account. .characterized by neeed for cost accounting and a reliance on concepts of continuity .there is e evidence by Sailero in 1915. c) asset is revalued.depreciating property was accounted for as unsold merchandise.being tranfered to profit &loss accout at balance date. b) asset account close at balacing date.method of treating fixed asset: a) asset carried forward original cost. 6) Eighteenth century 7)Nineteenth century .

. from computation eps.allow computation of periodic profit.Before industrial revolution. 9)Nineteenth century .development of funds statement.But.So. 10)Nineteenth &twentieth.accounting was mainly record of external relation of one bussiness unit with other business unit.Cost accounting emerged as a product of the industrial revolution. accounting for inflation and etc.8) Nineteenth century . accounting for business computation.appear cost accounting in manufacturing.development accounting method for complex issues . 11)Twentieth century .so use accounting records as administrative control.development technique of accounting for prepayments and accruals .large scale operation .so record determine in market.

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DEVELOPMENT OF ACCOUNTING THEORY .

PRE-THEORY PRAGMATIC ACCOUNTING NORMATIVE ACCOUNTING POSITIVE ACCOUNTING .

DEVELOPMENT OF ACCOUNTING THEORY Pre-theory Before the double-entry system was formalized in the 1400s. very little was written about the theory underlying accounting practices. r 300 years following Pacioli‟s 1494 treatise. During the developmental period of the double entry system. the main emphasis was on practice. . developments in accounting concentrated on refining practice. It was not until 1494 when Pacioli wrote the first book to document the double entry accounting system.

Until the 1930s. Developments in the 1800s led to the formalization of existing practices in textbooks and teaching methods. developments in accounting theory were rather random and ill-defined. . evolving as they were needed to justify particular practices.

In 1936 the American Accounting Association (AAA) released A Tentative Statement Of Accounting Principles Affecting Corporate Reports. that is based upon observation of practice. the theories promulgated to explain practice became more detailed and complex • • • . the AICPA established the Accounting Procedures Committee.Pragmatic Accounting • The period 1800-1955 is often referred to as the general scientific period. The emphasis was on providing an overall framework to explain why accountants account as they do. as research gained momentum over the period. which published a series of accounitng research bulletins Overall this period focused on the existing practical “viewpoint” of accounting and. in 1938 the American Institute of Certified Practicing Accountants (AICPA) made an independent review of accounting principles and released A Statement of Accounitng Principles (authored by Sanders. Hatfiled and Moore) In the same year.

The provide prescriptions for what should occur to achieve their stated objective.Normative Accounting • • • • The period 1956-70 is labeled the normative period because is was a period when accounting theorists attempted to established norms for best accounting practice. The normative period was one of significant debate. It degenerated into a battle between competing viewpoints on the ideal approach to measuring and reporting accounting information. leading to the continued use of the historical cost method. However the end result was no clear choice for changing practice to one ideal system of (inflation or price adjusted) accounting. Normative theories are distinguished because they adopt an objective (ideal) stance and the specify the means of achieving the stated objective. .

Normative theories are based on value judgement. The application of financial economic principles. The unlikelihood of acceptance of any one particular normative theory II. increased supply of data and testing methods. The two main factors that prompted the demise of the normative period were : I. Normative theories do not necessarily involve empirical hypothesis testing II. Peirson and Brown outline the two major criticisms of normative theories in the early 1970s : I. and was replaced by the specific scientific theory period. .• • The normative period began drawing to an end in the early 1970s. Henderson. or the positive era (1970).

Watts and Zimmerman consider that positive theory has given order to the apparent confusion associated with the choice of accounting techniques. They argue that positive accounting theory helps predict the reactions of investors in the market to the actions of management and to reported accounting information. whether it filled other roles. The objective of positive accounting theory is to explain and predict accounting practices. and whether it was inferior or superior to proposed alternatives. whether what practicing accountants produced had a decision usefulness objective.g. E.• • • • Positive theory sought to provide a framework for explaining the practices which were being observed. bonus plan hypothesis. The problem with this approach is that wealth maximization became the answer to every question .

agency theory. for multinational and listed corporation. The profession has sought normative theories to unify accounting practice and make it more homogeneous. This approach aims to eliminate accounting disclosures and techniques specific to one or a small group of countries which subsequently affects the comparability or integration of information. Whereas the academic research emphasis remains in the area of capital market. academic and professional developments in accounting theory have taken somewhat different approaches. • • • • . and behavioural impacts.Recent Development • Both academic and professional interests in theory development have tended to be aligned in the past. The need for a single set of international accounting standards was acknowledge by the accounting profession in Australia with the adoption of IFRS in January 2005. In recent times. whereas academic researchers have sought to better understand the role and impact of different forms of accounting information. the profession has pursued a more normative approach.