Accounting

Topics: Accountancy, Bookkeeping / Pages: 16 (3857 words) / Published: Oct 25th, 2013
HISTORY OF ACCOUNTING

LEARNING OUTCOMES

Understand the history of accounting dating from prehistoric times to written record keeping.
Identify the seven preconditions for the emergence of systematic book keeping.
Know Luca Pacioll contributions in introducing double entry book keeping.

Accounting is a tool, invented by humankind, to fulfill needs of society. Unlike the explorers of the past who discovered new lands, accounting cannot in any true sense be said to have been discovered, but must have been constructed by human minds to serve the human needs.
A basic accounting system is one of humankinds’ most enduring and widely used inventions. By taking a look at the evolution of accounting system over time, you will be able to:

Understand how and why original accounting tools were invented.
Identify lessons from history for modern accounting systems.
Trace the rise and changing nature of accountants and their profession.
Understand how changes in business, capital markets and legal and tax environments gave rise to external financial reporting and auditing function

Ancient accounting system development
The accounting system is generated by three essential concepts:
1. Time interval
This is derived from astronomical phenomena used for developing calendars. Stonehenge in England is believed to be a 4000-year old astronomical observatory used to calculate calendars. The stones were positioned and shaped to pinpoint the movement of the stars, sun and moon throughout a year. In about 1000 BC the Romans adopted a Calendar which consisted of 12 months of 30 days five extra days each year. July used to be the fifth month and was called Quintilis, which means fifth month. It later changed its name to July, after Julius Caesar. For an accounting system to record when financial transactions and events take place, some form of calendar is essential

2. Money Measurement
The money measurement concepts can only be applied to human affairs when

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