History and Development of Accounting Standards

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Accounting has been around since the beginning of civilization. ¡§Accountants participated in the development of cities, trade, and the concepts of wealth and numbers.¡¨ (Giroux) The importance of accounting cannot be overemphasized. Equally important are the standards used to guild the application of accounting practice. Without principles and standards, financial reporting would not fairly present the financial position of a company. Accounting has changed and evolved vastly over time and continues to change. I will discuss the evolution and history of accounting, the Conceptual frame work of accounting, and the governing bodies which shape the standards and principles of accounting practice.
The beginning of civilization occurred during the transition from hunter-gatherer to farmer. Farming led to crop surplus and therefore the need to trade and barter. Jericho, the oldest city known to historians was the first known trading center for surplus goods. Personal wealth created the need to keep track of inventories. Ancient bookkeepers used small clay balls called tokens to count and keep track of existing wealth. These tokens were used as evidence of transactions. Over time, the tokens were used to make impressions in clay along with pictures which represented the first attempts at accounting. These events took place around 5000 B.C. (Giroux)
Evidence suggests that double entry bookkeeping developed in Italy around 1200 B.C. The first book written on double entry bookkeeping was written by Luca Pacioli in 1494. (Smith) Pacioli was referred to as the father of accounting, but he did not actually invent the system he described. He simply wrote about the business practices used by merchants in Venice at the time. Many of his writings were used for several centuries. With the development of technology, wealth, and trade came the need to adequately account for the complexity involved. Scribes became accountants and in the process invented numbers and writing.



Cited: „« American Institute of Certified Public Accountants, Summary of AICPA Operations, August 21, 2005, < http://www.aicpa.org/dues/summary.htm> „« Farrell, James J. and Shadab, Houman B., The Focus of Future PCAOB Auditor Inspections, June 2005, „« Giroux, Gary, A Short History of Accounting & Business, „« Kieso, Donald E., Weygandt, Jerry J., Warfield, Terry D., Intermediate Accounting 11th ed., Hoboken, N.J., 2004 „« Library of Congress, America¡¦s story from America¡¦s Library, „« Sarbanes, Paul S., PCAOB Selection Process, December 19, 2002, General Accounting Office Report, „« Securities and Exchange Commission, „« Smith, Murphy L., Luca Pacioli: The Father of Accounting, March 26, 2002, < http://acct.tamu.edu/smith/ethics/pacioli.htm> „« Solomons, David, Making Accounting Policy, New York; Oxford University, 1986 „« Wikipedia, Sarbanes-Oxley Act, September 1, 2005,

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