History of Accounting

Accounting in a very simple sense is maintaining a record of varied activities. Thus, Accounting is some things that are used almost by everyone in their daily lives. In our lifestyle, we maintain a record of varied transactions or activities. After going through this lesson, you shall be able to understand the History of accounting.

History of Accounting

Evolution of Accounting

What does one think, accounting is one thing that is evolved in modern times? No, it’s been in use for the past. The roots of Accounting are often traced long back in civilization. Around 4000 B.C., in Babylonia and Egypt, payment of wages and taxes were recorded on clay tablets. As history claims that Egyptians kept the record of gold and valuable deposits and withdrawal from the treasuries.

These records were reported on a day to day by the in-charge of treasuries to the wazir, who wont to forward the monthly reports to the king. Babylonia and Egypt used this method to rectify and take away errors, frauds, and inefficiency from the records. Around 2000 B.C., China used a classy sort of accounting.

In Greece, accounting was wont to maintain total receipts and total payments and to balance government accounts. In Rome, around 700 B.C., receipts and payments were recorded within the daybook and were posted within the ledger at the top of the month. In 1494, Luca Pacioli wrote the book Summa de Arithmetica Geometria Proportioni et Proportionality. In this, he explained the terms debit and credit, which are utilized in accounting so far.

In India, around twenty-three centuries ago, Kautilya wrote the book Arthshastra, which described how accounting records had to be maintained. Book Keeping emerged during the Barter system when there was no cash system and trade was carried by exchanging goods and services. At that point, transactions were kept in individual ledgers, and that they are often provided as evidence just in case of a dispute.

Afterward, when currency and numbers were introduced then the only entry system of bookkeeping was evolved, where one column is maintained and every one the transactions whether paid or received are recorded therein column. within the 15th Century when Luca Pacioli explained the double-entry system, bookkeeping became more efficient as transactions were recorded separately within the debit and credit column which provided a transparent image of the financial position of the firm.

Earlier, Munshi JI or Munim JI used to play the role of accountants. They want to keep account of varied activities of varied people which is usually referred to as Bahi. At that point, the number of transactions wasn’t so huge and maybe easily recorded within the books.

Development of Accounting

In past, around 4000 B.C., accounting was used for recording wages and salaries, deposits and withdrawals of valuable goods (such as gold and silver) from the treasures of the king. Afterward, it was used to record the receipts and payments and balance of government financial transactions. During 1500 A.D., accounting was employed by business firms for recording transactions associated with the business. In 1800 A.D., accounting was wont to record transactions and also to supply information to varied users of monetary data.

During ancient times, accounting was merely concerned with the recording of financial transactions i.e. bookkeeping. But with the passage of time, the role of accounting has changed. In today’s world, the role of accounting is extended to provide relevant information to various users. With the passage of time, as the scope of business increased, their expenditure on different activities, in turn, increased which lead to a large number of transactions. To memorize the huge and complicated transactions is beyond human capacity.

Therefore, it becomes necessary to record them properly in the books in a systematic manner so that the exact position at the end of the day can be easily ascertained. For this, there arises a need for a sophisticated system that has been fulfilled by Accounting. Therefore, in the modern world, the area of accounting has broadened and is no more limited to the recording of transactions only. Accounting has evolved with the passage of time.

Thus, Accounting, in simple terms, is the recording of various transactions, that took place during a particular period, in the books of accounts in a systematic and proper manner. Accounting, nowadays, is just not limited to recording transactions in the books but also to convey useful information to its users.

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