History of Accounting

Accounting has a long history. Some scholars claim that writing arose
in order to record accounting information. Account records date back to the
ancient civilizations of China, Babylonia, Greece and Egypt. The rulers of
these civilizations used accounting to keep track of labor and materials used
in building structures like the great pyramids.

Accounting developed as a result of the information needs of
merchants in the city-states of Italy during the 1400s. In that commercial
climate, a monk Luca Pacioli, a mathematician and friend of Leonardo da
Vinci, published the first known description of double-entry bookkeeping
entitled Summa de Arithmetica, Geometria, Proportioni et Proportionalite,
which means Everything about Arithmetic, Geometry, and Proportion
published in Venice in November 1494. This book contained primarily
principles of mathematics and incidentally a set of accounting procedures.

The page of accounting development increased during the Industrial
Revolution as the economies developed countries began to mass-produce
goods. Until that time, merchandise was priced based on managers hunches
about cost but increased competition required merchants to adopt more
sophisticated accounting system.

In the nineteenth century, the growth of corporations especially those
in the railroad and steel industries, spurred the development of accounting.
Corporate owners were no longer necessarily the managers of their business.
Managers had to create accounting systems to report to the owners how well
their businesses were doing.

Government played a role in leading more development in the field of
accounting when it started using the income tax. Accounting supplied the
concept of income. Also, government at all levels has assumed expanded
roles in health, education, labor and economic planning. To ensure that the
information that it uses to make decisions is reliable, the government has
required strict accountability in the business community.

At the beginning of the third millennium, there would still be significant
developments in the field of accounting. The great challenge of globalization
and effects of new technologies (e.g. super computers, robotics, inter and
intranet, etc.) pose a shift in the structure and pattern in this field. More and
better information are now being required and therefore, accounting, being
the means used in communicating business and financial information, must
also evolve into a more efficient level.