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History of Accounting

The Origins of Accounting

The
 origins
 of
 accoun/ng
 are
 in
  prehistory.
 
 
 
 
  Cave
 dwellers
 
 bartered
 meat
  for
 berries
 and
 or
 stone
 tools
  and
 weapons.
 
 

???????
 
•  What
 would
 you
 give
  for
 6
 Brontosauras
  steaks?
 
– 
 4
 flints?
  –  1
 spear?
  – 
 6
 rabbit
 hides?
 

•  The
 process
 of
 deciding
  on
 rela/ve
 worth
 for
  barter
 transac/ons
 is
 a
  form
 of
 “accoun/ng”
 

2
 +
 2
 =
 22
 
•  The
 inven/on
 of
  numbers
 
 led
 to
  coun/ng
 and
  accountants
 have
  never
 been
  unemployed
 since
 

$$$$$$$$$$$$$$$$$$$$$$
 
•  The
 inven/on
 of
  “money”
 was
 a
 great
  impetus
 to
 the
  development
 of
  accoun/ng,
 because
  money
 led
 to
 an
  exponen/al
 growth
 in
  commerce.
 

The
 first
 known
 full-­‐/me
  accountants
 
•  Circa
 7000BC
 -­‐
 the
  Sumerian
 civiliza/on… the
 inven/on
 of:
 
–  god-­‐kings
  –  taxes
 

•  There
 are
 acheological
  accoun/ng
 records
  from
 this
 era
 

 Accounting Follies

 (it’s not easy to find accounting jokes)

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I’m going to account until 10..and then this thing better be off my foot

Coinage:
 accoun/ng’s
 basic
 unit
 
•  Coinage
 (formal)
  money
 invented
 in
  Lydia
  •  Alexander
 the
 Great
  created
 the
 first
  universal
 currency
 
 
–  coins
 with
 his
 image
  were
 legal
 tender
  thruout
 the
 known
  world
 

Trading
 empires…accoun/ng
 goes
 big
 /me
 
•  Phoenicians
 were
 the
 first
  society
 built
 on
 a
 founda/on
 of
  trade
 

•  Venice
 perfected
 the
 concept
 

–  Their
 trading
 ships
 crisscrossed
  the
 Mediterranean
 thousands
  of
 years
 ago
  –  Accoun/ng
 records
 have
 been
  found
 on
 sunken
 ships
  –  They
 also
 introduced
 the
  concept
 of
 credit
 and
 of
 joint
  ventures
  –  Medieval
 Italy
 is
 famous
 for
 its
  great
 trading
 houses
 

The
 Medieval
 Era
 
•  Constant
 wars
 and
  trade…
 medieval
  Europe
 was
 a
 beehive
  of
 accoun/ng
 ac/vity
 

The father of modern accounting

Luca Pacioli 1445 - 1517

Accoun/ng’s
 Supreme
 honcho
 
•  Luca
 Pacioli
 
 invented
 “double
 entry
  bookkeeping”
 in
 1494
 and
 the
 concept
 of
 the
  Balance
 Sheet
 Equa/on
  •  Your
 terms
 debit
 and
 credit
 come
 from
 the
 La/n
  debere
 and
 credere
  •  The
 principles
 he
 developed
 
  •  are
 s/ll
 the
 founda/ons
 of
 
  •  modern
 accoun/ng
 

The
 first
 “corpora/on:
 
•  The
 English
 mari/me
 empire
 led
 to
 the
 forma/on
  of
 the
 East
 Indies
 Company…
 a
 commercial
  inven/on
 requiring
 all
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