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ATPB 313

TOPIC 1: HISTORICAL DEVELOPMENT
OF ACCOUNTING

• IZZATI FARHAN BT SHAMSUDDIN
AC 087323
• NOR AYUNI ATIQAH BT MOHAMED
RUSLAN
AC 087371
SECTION 1 AM

1. DISCUSS THE BENEFITS OF STUDYING ACCOUNTING HISTORY
a) Accounting history can be as a guidance to
make an improvement to accounting
practices.
b) create the new accounting theory and
practices more recognition and
measurement

LITTLETON (1969) OUTLINED 7 PRE-CONDITIONS NECESSARY FOR THE
DEVELOPMENT OF DOUBLE ENTRY BOOKKEEPING. WHAT ARE THEY
AND WHY DID LITTLETON CONSIDER THESE ESSENTIAL?
W – THE ART OF WRITING
-In the past, Many business owner had little education.
-Nowadays more businessmen are able to read and write.
-The availability of paper make written records.

A – ARITHMETIC
-Arabic numerals were easy in calculate.
-Movement away from roman numerals to adoption Arabic numerals
facilitated the adoption of double entry book keeping.

C – PRIVATE PROPERTY
-In the past, most of the property were shared or government owner.
-Double entry book keeping provided a clear framework to report on this.






M – MONEY
-Money is a comparable common language that things can be converted into.
-Since it is able to record value, there is a need for double entry book keeping
exists.
C – CREDIT
• Credit transaction is much more complex than cash transaction.
• One must keep tracking its accounting receivable until the money is
received.
• Double entry book keeping system enables business to record its account
receivable and keep tracking on this record.
C – COMMERCE
-There is a need to keep record in a way to ensure it can be understand in a
wide range.
- The growth in commerce is a catalyst for adoption of double entry book
keeping system.
• C – CAPITAL
-Double entry book keeping system helps companies to provide a fair view to
investors.



3. EXPLAIN WHY THE DOUBLE ENTRY WAS SUPERIOR TO SINGLE
ENTRY DURING THE AGE OF DOUBLE ENTRY?
• Enable transactions to be recorded in a more
systematic and orderly manner.
• By means of a trial balance provided an
arithmetical check on records and a balancing of
the books.
• Internal control elements inherent in double
entry allowed the division of duties between
bookkeepers facilitating specialisation, thus
reducing errors and making fraud more difficult.

4. DURING THE “AGE OF STAGNATION” WHY DID SINGLE ENTRY
ACCOUNTING PERSIST AND WHY WERE BUSINESSES SLOW TO ADOPT
THE DOUBLE ENTRY SYSTEM
• Small size of businesses and the relatively few
transactions involved
• The average business was small with little
distinction between ownership and
management
• The ability of double entry to summarise and
report the success or failure of a business for a
specified period of time was not valued at that
time

5. WHAT CONCEPTS WERE ABSENT FROM ACCOUNTING
RECORDS DURING THE SO-CALLED “AGE OF STAGNATION”?
• THE CONCEPTS OF PERIODICITY AND MATCHING.
• EXP: CONCEPT OF PROFIT WAS NOT REGARDED
HIGHLY.
• DISREGARDING ASSET DEPRECIATION, WRITING OF
BAD DEBTS.
• NO DISTINCTION BETWEEN REVENUE AND CAPITAL
ITEMS AND PRIVATE AND BUSINESS EXPENDITURE.
6. WHY WAS THE ROYAL MAIL CASE IMPORTANT TO THE
DEVELOPMENT OF ACCOUNTING? YOUR ANSWERSHOULD RELATE TO
THE ISSUES OF RECOGNITION AND MEASUREMENT.
• The parent company was able to report profit
even though the group as a whole was
suffering heavy losses through inter company
dividend transfer
• There was no requirement that group account
be consolidated
• Companies act requires that UK companies to
consolidate group account Royal Mail case.
7. EXPLAIN THE POSSIBLE FACTOR THAT INFLUENCING
ACCOUNTING REGULATION AND PRACTICE GLOBALLY.
ANSWER
• Accounting principles
– Accounting principles provide a general
framework of reference by which accounting
practice can be evaluated and guide the
development of new practices and procedures.
• Adoption of financial reporting standard
– To standardize all the accounting report so that
users from worldwide can better assess the
financial report and make decision making.