Analysis of the History of Accounting


Accounting is one of the oldest professions with subsequent developments that have led to what it is currently. The history of accounting begins with Luca Pacioli who has contributed so much to the evolution of accounting systems (Santis 1). He is the man behind the invention of the double entry system which he developed in the year 1494 (Giroux 1).

The accounting profession began with the keeping of primitive records on wood cuttings or rocks to the current tasks of recording, monitoring and the assessment of financial issues of a business enterprise.

The history of accounting is thus important as it helps those in the profession to be informed of the background of the systems hence being able to use it as the gauge of improving on the profession (Giroux 1). This paper is therefore an in-depth analysis of the history of accounting from the ancient times to the twentieth and early twenty firs centuries up to the current systems of accounting.

Ancient Accounting

The equation of double entry in book keeping was the first development in the field of accounting. This was initiated by change of ownership of properties, interchange of goods, the present use of future goods, employment of wealth as well as keeping records for all the transactions made , not forgetting the arithmetic used in the computations (Alexander 2).

The aforementioned initiating factors were present even in the ancient times but had not been complied so as to form a concrete system, thus the accounting system. During the ancient times, farmers transacted through the exchange of their commodities. Other than the farmer’s transactions in Mesopotamia, there were also transactions whereby gold and silver were used as ways of getting credit hence the issue of banking was developed.

In addition to this, transactions were deemed complete after the involved parties signed their names on clay or wooden templates. These developments went on through the medieval accounting where journals and other accounting books were innovated down to the twentieth and twenty first centuries (Alexander 6).

Accounting in the Twentieth Century

This era was characterized by the end of the civil war and the world facing many financial scandals such as the great recession. The balance sheet was most used during this period whereby it was used to monitor the stockholders’ monies as well as used in the banking industry. Besides the balance sheet, other financial activities such as those affecting the working capital or current assets which required the development of other funds statements. Most of these innovations took place America and Britain since these were the states where innovation was dominant (Giroux 1).

It was also during this era that two branches of accounting; cost accounting and auditing were developed. These were as result of factors such as the increased regulations by the government for example the Bankruptcy Act of 1869in Britain which led to the demand of accountants who were needed to work on the liquidations as well as the bankruptcy issues.

The demand for auditors came in hand with the enactment of the companies Act of 1862. This Act required that corporations have their accounts and statements audited to ensure effectiveness.

Current Accounting

Accounting systems have been changing with the change in technology as well as because of the new demands that come about due to the rapid globalization rate. The current accounting systems are simple to use at the same time being very sophisticated.

These developments range from the invention of accounting books, calculators, tabulating machines to the creation of software used to perform the accounting analyses (Giroux 1). Unlike in the ancient times, professional accounting organizations have been formed globally so as to ensure that accountants are informed of the globally accepted accounting systems.

The current accounting system has been divided in such a way that different sectors or individual will perform different duties but play the role of accounting. Thus we have the management or cost accountants who are concerned with the apportioning of the organization’s finds to different financial obligations. Secondly, there are the financial accountants who prepare financial statements to determine the financial position of the enterprise.

The internal and external auditors of the company are responsible for checking if the financial documents have met the requirements of the accepted accounting system. They inspect the books of accounting to ensure that they are up to date and that the organization is following the right trend. The modern accounting department has supporting staff such as the book keepers, IT specialists, typists just to mention but a few.


From the above discussion it can be deduced that the accounting systems have undergone tremendous changes from the primitive methods to the sophisticated and complex concepts of accounting. Despite the many changes, the initial concept of double entry in book keeping has remained to be the same as it was in the ancient times. However, knowledge of the history accounting is important as it helps in the predication of the future accounting systems. It should not be forgotten that the development and advancement in accounting systems is interconnected with technology.

Works Cited

Alexander, John. History of Accounting. 2002. Web.

Giroux, Gary. A short history of accounting and business. 1999. Web.

Santis, James. A brief history of Accounting: From prehistory to the information age. 2000. Web.

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