1．Littleton (1969) outlined seven pre-conditions necessary for the development of double entry bookkeeping. Discuss each of these in the context of why Littleton felt they were essential.
In the past, Many business owner had little education backgrounds. They had insufficient knowledge and had no idea why record keeping was important. Nowadays more and more businessmen are able to read and write and also the availability of paper make written records facilitate the adoption of double entry book keeping.
Roman numerals were easy to understand and remember but were arithmetic friendly. Instead, Arabic numerals were easy in calculate in terms of add and subtracting. Therefore, movement away from roman numerals to adoption Arabic numerals facilitated the adoption of double entry book keeping.
• Private property
In the past, most of the property were shared or government owner, people had no idea how much those property costs. Owning assets raises the need to assess the costs and benefits of the property. Double entry book keeping provided a clear framework to report on this.
The increasing number /size of the company and international trades are the signals of growth in 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.
• Capital investment
Earlier day, depreciation of the assets was not put into consideration. The examples were some new rail way companies in early 19th century. Some managers tried to exaggerate profit figures. They paid out dividends and presents annual reports to shareholders without considered some of the liabilities and relevant costs, for example depreciation of the assets. Double entry book keeping system helps companies to provide a fair view to investors.
Money is a comparable common language that things can be converted into. Since it is...
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