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Home / Blog

History of Accounting: How It’s Evolved Over Time

October 4, 2022 

Tables of Contents

History of Accounting

History of financial accounting, history of forensic accounting, modern accounting methods, history of accounting timeline, accounting: from clay tablets to computers.

Accounting has come a long way from its infancy, both in its practices and in the ways that it’s helped shape society.

Accounting’s earliest days may have come 12,000 years ago, when people  likely traded resources  while primarily surviving by hunting animals and gathering fruit. By comparison, accounting today involves various electronic processes and is responsible for billions of dollars in sales. The Business Research Company reports that the market size of the  global accounting services industry  was nearly $588 billion in 2021 and projects that it will increase to $1.7 trillion by 2031.

The changes to accounting since its first days have occurred alongside some of the biggest shifts in society, with the industry influencing responses to technological shifts, financial crises, and ethics questions. Understanding the history of accounting is key to understanding many facets of society’s shifts over time.

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Accounting is the process of tracking financial information, providing a system for recording, verifying, analyzing, and reporting on transactions. In business, the term “accounting” refers to the  tracking of income and expenses .

While the practice may have begun centuries earlier,  accounting’s first official records  are tax information on clay tablets from around 3300 B.C. Archaeologists discovered these artifacts in Egypt and the area that once was Mesopotamia. Around this time, historians believe, Egyptians were also using accounting to  monitor their pharaoh’s possessions  and uncover fraud.

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Throughout history, the practice of accounting has played many roles in tracking transactions and monitoring performance. This wide range of uses for accounting includes, according to TheStreet: noting herd and crop growth, recording “good deeds,” tracking monetary transactions, measuring corporate performance, ensuring regulatory compliance, and investigating financial wrongdoing.

Four Stages of Accounting History

The history of accounting  incorporates four stages  with distinct developments and processes. The first stage began in primitive times and ended in the 15th century, and the most recent stage began in 1951 and has lasted to the present. The stages follow:

The first stage of accounting dates to the primitive days of civilization. Although historians haven’t uncovered a record of accounting practices during this time, they point to the first exchange of goods or services as the likely start of some form of record keeping. This period lasted until 1494, with the publication of the first book to describe double-entry accounting, a system using debit and credit entries.

Accounting practices that took place during the overall historic periods within this time frame include the following:

• Stone age  — Marking ticks on cave walls and mountains, and in the jungle to record goods collected and loaned
• Primitive  — Noting symbols on walls and making rope knots to designate transactions
• Barter  — Recording deals made through barter for agricultural or other property
• Currency  — Tracking monetary transactions, originally in Europe, related to transactions that bank loans financed

Preanalytic

The period between 1495 and 1799 in the history of accounting is called the preanalytic period. This span of time saw the introduction of some key accounting concepts:

• Going concern  — A business’s  ability to stay afloat
• Periodic inventory  — The practice of recording financial entries at the end of  each given accounting period
• Money measurement  — A system that records only transactions that  have monetary value

Development

The development, or explanatory, period in accounting dates from 1800 to 1950. This time frame includes two key shifts in business, with the industrial revolution moving much of the world to a  manufacturing-based economy  and the emergence of joint-stock companies bringing  multiple business shareholders  to the table.

The impact of these changes and others in the development period includes the following:

• Industrial revolution  — Required tracking the large amounts of capital involved in establishing new corporations and railroads
• Joint-stock companies  — Added complexity to doing business, with the financial concerns of shareholders and other business partners becoming factors
• Government regulation  — Led to the development of uniform accounting practices to accommodate tax laws

From 1951 to the present day, accounting has been in its modern period, with accounting methods continuing their shift to meet uniform standards. The growing demand for long-term financial forecasting led to calls for accounting methods that accurately report current finances and project future conditions.

To accommodate the need for true and fair reporting, the U.S. accounting industry adopted generally accepted accounting principles (GAAP). These  rules, standards, and procedures  dictate the way that the nation’s public companies compile and report financial statements.

Some key issues in the global economy drove accounting developments in this period as well, including the following:

• Stock market crash of 1929  — Led to the enforcement of accounting standards and the establishment of the U.S. Securities and Exchange Commission (SEC)
• Ethics investigations  — Helped to shape the profession’s standards and oversight, following high-profile instances of illegal accounting practices ranging  from gangster Al Capone  to  energy company Enron

Recognition of Accounting as a Profession

The recognition of accounting as a profession occurred with the first organizations focused on the career. Established in Scotland in 1854, the Institute of Accountants and Actuaries in Glasgow and the Edinburgh Society of Accountants were the first professional organizations for accountants. The groups’ members called themselves “chartered accountants,” and the Glasgow organization  petitioned Queen Victoria  for a royal charter recognizing the role as independent from solicitors, a legal profession.

The American Association of Public Accountants (AAPA) followed in 1887. In 1896, the first accountants took the standardized test that designated them as certified public accountants (CPAs). In 1957, the organization that awards the CPA designation became the American Institute of Certified Public Accountants (AICPA).

Financial accounting is a  branch of accounting  involving the recording, summarizing, and reporting of the many transactions related to business operations over a period of time. These materials typically assist accountants with compiling financial information for outside parties. To record these transactions, accounting professionals use financial statements, including the following:

• Balance sheet  —  Reports assets , liabilities, and shareholder equity
• Income statement  —  Notes revenue , expenses, gains, and losses
• Cash flow statement  — Summarizes the  movement of cash  into and out of a company

History of Financial Accounting Practices

Tokens and bookkeeping are evident from the history of financial accounting’s earliest recorded days thousands of years ago — but it was in 1458 when Benedetto Cotrugli invented the double-entry accounting system that established the foundation for modern accounting. He was a  merchant, an economist, a scientist, and a diplomat  from what was then the Republic of Ragusa.

However, Luca Bartolomeo de Pacioli, who was an Italian mathematician and a Franciscan monk, became known as the  father of accounting . His 1494 book,  The Collected Knowledge of Arithmetic, Geometry, Proportion, and Proportionality , includes a 27-page section about bookkeeping. It describes the double-entry system that Venetian merchants used.

The book was also the first to use plus and minus signs.

The accounting system that de Pacioli outlined called for tracking assets, liability, capital, income, and expense accounts — similar to the entries that appear on modern balance sheets and income statements. He warned that individuals shouldn’t go to sleep at night until their debits matched their credits.

Evolution of Financial Accounting Technology

Tools and technology have further revolutionized financial accounting, with professionals in various industries inventing processes to speed bookkeeping. Advancements that changed financial accounting include the following:

Adding Machine

One of the earliest advances in financial accounting tools was in the 1880s, when American inventor William Burroughs  invented the adding machine . This tool allowed accountants to calculate more accurately and efficiently than previous methods, such as  tokens, clay balls, and abaci .

Spreadsheet Software

Introduced in 1978, VisiCalc was the first spreadsheet software to allow financial modeling on the computer. That same year saw Peachtree Software launch an accounting software package for the personal computer. These developments, along with the 1998 introduction of QuickBooks for day-to-day bookkeeping, made financial accounting tasks easier to perform than relying on mainframe computers.

Forensic accounting  combines skills in accounting, auditing, and investigation to examine individuals’ or businesses’ finances. Forensic accounting often plays a role in legal proceedings in fraud and embezzlement cases, with uses in situations such as:

• Criminal investigations  — Determining whether a crime occurred and identifying intent in cases such as employee theft or securities fraud
• Litigation support  — Providing insight into the amount of damages to award in legal disputes
• Insurance claims  — Using historical data to calculate economic damages from claims such as those for accidents or medical malpractice

Origins of Forensic Accounting

The earliest days of the history of accounting likely included forms of forensic accounting. Historians believe Egyptians monitored for fraud by tracking their kingdom’s possessions.

By the 1800s, accountants were serving as witnesses in court cases. In 1824, a Glasgow advertising circular was the first to refer to forensic accounting.

Some credit the  understanding of fraud  to a 1934 study by the authors of the book  Principles of Criminolog y. However, Frank Wilson, an accountant for the IRS, may have played the biggest role in the history of forensic accounting. He established the modern version of forensic accounting when he helped convict Al Capone of tax evasion in the 1930s.

Today’s Financial Accounting

By the mid-1990s, forensic accounting had become its own distinct form of accounting. Regulations had placed much of the responsibility for anti-fraud protections in the hands of CPAs, with scandals in the financial world driving many of these new requirements.

For example, the savings and loan (S&L) crisis, which  led to the failure  of hundreds of savings and loan associations between 1986 and 1995, led Congress to pass the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The legislation revamped industry regulations to help curb the fraud that contributed to the crisis. Since that time in financial accounting history, forensic accounting has helped uncover financial inconsistencies that have led to scandals such as the following:

Enron Collapse

Enron became one of the fastest-growing U.S. companies in the 1990s — thanks in large part to  hidden debt and bad assets . The company collapsed following a thorough review of financial statements that uncovered fraud.

The Sarbanes-Oxley Act of 2022, which reformed corporate financial practices, was a  response to the Enron scandal .

Lehman Brothers Bankruptcy

Once the fourth-largest investment bank in the United States, Lehman Brothers grew through heavy reliance on high-risk real estate investments and subprime mortgages. Fiscal accounting following the  bank’s downfall in 2008  revealed the depth of the problem.

The Lehman Brothers scandal led to the financial crisis of 2008. In response, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law in 2010, with the aim of  protecting consumers and taxpayers  against risky bank investments.

Bernie Madoff Ponzi Scheme

Forensic accounting evidence first presented to the SEC in 2000 led to the  2009 arrest and conviction  of American financier Bernie Madoff. His low-risk, high-return investment scheme defrauded thousands of investors out of billions of dollars over more than 15 years.

Traditional, or British, accounting is a high-level approach to recording transactions that was predominantly used early in accounting’s history. The modern, or American, method of accounting is a more in-depth look at financial numbers that helps business leaders:

• Access data
• Analyze trends
• Develop forecasts
• Strategize to  gain an advantage over competitors

Most developed countries now use modern accounting methods, which also typically rely on electronic processes for  greater speed and accuracy .

Traditional Accounting vs. Modern Accounting

Different categories and tools define the two primary approaches to accounting. Below are some distinctions between traditional and modern accounting.

Traditional Accounting

Traditional accounting uses  three categories  for tracking transactions. Personal accounts relate to a person or organization, while real and nominal accounts are considered impersonal accounts that aren’t for a specific individual or firm.

• Personal  — Transactions related to a person, firm, company, or other organization
• Real  — Accounts whose balances carry from one accounting period to the next
• Nominal  — Accounts whose balances close at the end of each accounting period, starting the next period with a zero balance

Modern Accounting

Modern accounting divides financial data into  additional categories , including the following:

• Assets  — Items of value that a company owns
• Liabilities  — Debts payable to outside entities
• Capital  — The value of assets minus liabilities
• Revenue  — Cash coming into the company because of its primary business activities
• Expenses  — Amount spent on items or activities to generate revenue
• Withdrawals  — Funds withdrawn by the business owner for personal use

Technology and Modern Accounting

Various technological tools assist in tracking the various types of transactions that modern accounting captures. With these tools providing an efficient way of generating figures, today’s accountants have more time to focus on analyzing trends and providing guidance that informs corporate strategies.

Modern accounting methods increasingly use the following tools and processes:

• Digital payments and systems  —  Electronically calculating and sharing  financial information and analysis
• Cloud storage  — Maintaining accounting data off-site for access by multiple individuals in an organization
• Artificial intelligence and machine learning  — Quickly and accurately  analyzing large volumes of data
• Blockchain  — Assists in  maintaining a ledger  and safely transferring asset ownership

Key emerging trends in accounting, according to Software Suggest, include: data analytics emphasis, forensic accountancy, emerging automation, cloud-based operations, and blockchain use.

The history of accounting spans thousands of years, transforming from a simple recording of transactions to today’s complex system for recording, predicting, and investigating financial outcomes. The following history of accounting timeline includes highlights from the documented use of accounting:

• Circa 3300 B.C.: Earliest documented use of accounting . Artifacts show tax records on clay tablets.
• 1458: Invention of double-entry accounting method . Benedetto Cotrugli invented the double-entry accounting system, establishing the foundation for modern accounting.
• 1494: Publication of the first book describing the double-entry accounting method . Luca Bartolomeo de Pacioli, known as the father of accounting, published Summa de  Arithmetica, Geometria, Proportioni  et  Proportionalita.
• 1854:   Establishment of the first accounting professional organizations.  The members of the Institute of Accountants and Actuaries in Glasgow and the Edinburgh Society of Accountants called themselves chartered accountants.
• 1880s:   Invention of the adding machine.  William Burroughs invented the adding machine, improving accounting’s speed and accuracy.
• 1930s:   First high-profile use of forensic accounting.  IRS accountant Frank Wilson uncovered financial irregularities that led to the arrest of Al Capone.
• 1955:   First purchase of a computer for accounting use.  General Electric made the first purchase of a computer to perform accounting functions such as payroll processing.
• 1978:   Introduction of spreadsheet software.  VisiCalc was the first spreadsheet software to allow financial modeling on the computer.

Accounting has evolved from simple record keeping to sophisticated systems of checks and balances. Key developments, according to BSC and Medius, include: Around 3300 B.C. — Tax records on clay tablets. 1458 — Double-entry accounting system. 1494 — First book with accounting concepts. 1854 — First professional accountant organizations. 1880s — Adding machine. 1955 — First computer for accounting. 1978 — First spreadsheet software. 2000 — Accounts payable automation.

Links to Learn More About Accounting

Accounting organizations offer resources that provide additional details about accounting and its background as well as jobs and certifications:

• Association of Chartered Certified Accountants  — ACCA offers insights about the history and future of accounting for students, educators, and accountants.
• Association of Certified Fraud Examiners  — The ACFE provides training, career resources, and the opportunity to pursue the Certified Fraud Examiner (CFE) designation.
• Association of International Certified Professional Accountants  — AICPA offers exams for CPA and Chartered Global Management Accountant (CGMA) designations as well as resources on topics such as ethics, forensic services, and technology.
• American Accounting Association  — The AAA caters to accounting professionals in the academic community by providing research, a newsletter, and a career center.
• Association of Nonprofit Accountants & Finance Professionals  — ANAFP provides resources for accounting and finance professionals in the nonprofit sector, with materials about topics such as accounting and bookkeeping and tax returns.
• National Society of Accountants  — NSA assists tax and accounting professionals with training, webinars, discount programs, and advocacy efforts.

From its earliest origins, accounting and the professionals who practice it have helped shape — and have been shaped by — some of the most influential events in global history. Those historical shifts continue today, with technology driving many of the latest developments in accounting, just as digital tools grow in importance throughout society. From maintaining balance sheets to investigating business records to analyzing financial data, accountants play a crucial role in business operations.

Infographic Sources

BSB, “Brief History of Accounting”

Medius, “The History of Accounting — from Record-Keeping to Artificial Intelligence”

Software Suggest, “13 Trends in Accounting for 2022 and Beyond”

TheStreet, “History of Accounting: Timeline”

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Accounting History and Terminology

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• Accounting History and Terminology CURRENT ARTICLE
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• Triple Bottom Line (TBL)
• Variable Cost
• Work-in-Progress (WIP)
• Year-Over-Year (YOY)
• Zero-Based Budgeting (ZBB)

What Are the Origins of Accounting?

Accounting is more than just the act of keeping a list of debits and credits . It's the language of business and, by extension, of all things financial. Our senses collect information from our surroundings that our brains then interpret. Accountants translate the complexities of finance into information that the public can understand.

Key Takeaways

• Bookkeepers came to be when societies used the barter system and needed to record the agreements they were making regarding goods or services transactions.
• Accounting ledgers were later completed by hand. They used either a single- or double-entry system.
• Luca Pacioli, a monk, laid the groundwork for modern accounting by creating an independent record that provided a clearer picture of an entity’s financial activities: the financial statement.
• Railroads and the emergence of corporations were the stimulus for the establishment of accounting professionals.

Investopedia / Sabrina Jiang

Accounting is a language that dates back thousands of years and has been used in many parts of the world. The earliest evidence of this language comes from Mesopotamian civilizations more than 7,000 years ago.

The Mesopotamians kept the earliest records of goods traded and received and these activities are related to the early record-keeping of the ancient Egyptians and Babylonians. The Mesopotamians used primitive accounting methods, keeping records that detailed transactions involving animals, livestock, and crops.

Philosopher and economist Chanakya wrote “Arthashastra” in India during the Mauryan Empire around the second century B.C. The book contained advice and details on how to maintain record books for accounts.

The Bookkeepers

Bookkeepers most likely emerged when society was still using the barter system to trade rather than a cash-and-commerce economy before 2000 B.C. Ledgers from these times read like narratives with dates and descriptions of trades made or terms for services rendered.

These ledger entries may have looked like this:

• Monday, May 12: In exchange for three chickens, which I provided today, William Smallwood (laborer) promised a satchel of seed when the harvest is completed in the fall.
• Wednesday, May 14: Samuel Thomson (craftsman) agreed to make one chest of drawers in exchange for a year’s worth of eggs. The eggs are to be delivered daily when the chest is finished.

All these transactions were kept in individual ledgers. They provided proof when matters were brought before magistrates if a dispute arose. This system of detailing every agreement might have been tiresome but it was ideal because long periods could pass before transactions were completed.

New and Improved Ledgers

Bookkeeping evolved as currencies became available and tradesmen and merchants began to build material wealth. Business sense and ability with numbers were not always found in one person so math-phobic merchants would employ bookkeepers to maintain a record of what they owed and who owed debts to them.

Until the late 1400s, this information was arranged in a narrative style with all the numbers in a single column whether an amount was paid or owed. This is “single-entry” bookkeeping.

You can see in this sample of a bookkeeper's single-entry system how the entries are laid out with a date, a description, and whether it was owed or received by the symbols in the amount column.

The bookkeeper had to read the description of each entry to decide whether to deduct or add the amount when calculating something as simple as monthly profit or loss. This was a time-consuming and inefficient tallying method.

The Mathematical Monk

Italian monk Luca Pacioli revamped the common bookkeeping structure as part of the tradition of learned monks conducting high-level scientific and philosophical research in the 15th century. Pacioli laid the groundwork for modern accounting. Commonly known as “the father of accounting,” he published a textbook called “Summa de Arithmetica, Geometria, Proportioni et Proportionalita” in 1494. It showed the benefits of a double-entry system for bookkeeping.

The idea was to list an entity’s resources separately from any claims on those resources by other entities. This meant creating a balance sheet with separate debits and credits. The innovation made bookkeeping more efficient and provided a clearer picture of a company’s overall strength but this record was only for the owner who hired the bookkeeper. The general public had no access to such records, at least not yet.

This is what the double-entry system may have looked like back in the day. You can see the two separate columns for debits and credits along with the description of each transaction and how it was paid: in cash or commodities. It was chickens, seeds, eggs, and furniture in this case.

Coming to America

Bookkeeping migrated to America with European colonization. It was sometimes referred to as accounting but bookkeepers were still doing basic data entry and calculations for business owners. The businesses in question were small enough that the owners were personally involved and aware of the financial health of their companies. Business owners didn't need professional accountants to create complex financial statements or cost-benefit analyses .

The American Railroad

The appearance of corporations in the United States and the creation of the railroad were the catalysts that transformed bookkeeping into the practice of accounting based on accounting postulates. The railroad was by far the most powerful of the two factors.

Distribution networks, shipping schedules, fare collection, competitive rates, and some way to evaluate whether all of this is being done in the most efficient way possible are all necessary for goods and people to reach their destinations. Enter accounting with its cost estimates, financial statements, operating ratios, production reports, and a multitude of other metrics to give businesses the data they needed to make informed decisions.

The railroads also allowed information to be passed from city to city at great speed. Business transactions could be settled in days rather than months. Timing was uneven across the country before the railroad. Each township previously decided when the day began and ended by general consensus. This was changed to a uniform system in 1883 because it was necessary to have goods delivered and unloaded at certain stations at predictable times.

The shrinking of the country thanks to the railroads and the introduction of uniformity encouraged investment that in turn put more focus on accounting.

Investing had been a game of either knowledge or luck up until the 1800s. People acquired issues of stock in companies with which they were familiar through industry knowledge or acquaintanceships with the owners. Others blindly invested according to the encouragement of relatives and friends.

There were no financials to check if you wanted to invest in a corporation or business. The risks involved therefore ensured that investing was only for the wealthy, a rich man’s sport tantamount to gambling.

Early Financial Statements

Corporations began to publish their financials in the form of balance sheets, income statements , and cash flow statements to attract investors. These documents were proof of a company’s profit-making abilities.

Investment capital stimulated operations and profits for most corporations but it also increased the pressure on management to please their new bosses: the shareholders . These shareholders didn't completely trust management and this exposed the need for independent financial reviews of a company’s operations.

Birth of a Profession

Accountants were already essential for attracting investors and they quickly became essential for maintaining investor confidence. The American Association of Public Accountants (AAPA) was established in 1887 and the accounting profession was formally recognized in 1896 with the establishment of the professional title of certified public accountant (CPA).

How Has Modern Accounting Evolved?

Technology has changed accounting. Bookkeeping has become automated. Bookkeepers have used several tools since the first records were kept in America. William Seward Burroughs’ adding machine was created in 1887 and perfected for commercial sale in the 1890s. It helped early accountants calculate receipts and quickly reconcile their books.

IBM's first large computer was based on the vacuum tube when it was first released in 1952. It was small enough to make it possible for businesses to buy them and this led to accountants being among the first to use them. Transistors were replacing the tubes and making computers even more accessible by 1959. They were being supplanted by microchips as early as 1961, which eventually led to computers for everyone.

What Is the Double-Entry System for Bookkeeping?

Double-entry bookkeeping requires dual account entries. An opposite entry must be made into one account for every entry in another account. The ideal end result is that the company's books will achieve balance.

What Are the Requirements to Become a CPA?

The CPA title is awarded to those who pass state examinations and have one or more years of experience in the field. The number of years can vary by state.

The creation of professional accountants came at an opportune time. The demand for CPAs skyrocketed as the U.S. government found itself in need of money to fight a war and began charging income tax in 1913.

How Does a Barter System Work?

The barter system predates money and currencies but it's still used in modern times. It's the exchange of goods and/or services between two parties. Goods and/or services are acquired by trade.

The concept of accounting has been around in one form or another for centuries. Initially designed to record trades made in barter systems, the practice has evolved over generations thanks to contributions made by second-century B.C. economist Chanakya, Luca Pacioli, and the Mesopotamians.

Technology has brought about the advent of accounting software such as QuickBooks. These advancements are much more intuitive, helping accountants do their job more quickly, more accurately, and with more ease.

Fremont College. “ History of Accounting .”

Encyclopaedia Britannica. “ Artha-shastra .”

New World Encyclopedia. “ Luca Pacioli .”

Circulus. “ 1860–1880 History of Accounting .”

History. “ Railroads Create the First Time Zones .”

Circulus. " History of Accounting: 1880 thru 1900 ."

Smithsonian Magazine. “ How America’s First Adding Machine is Connected to ‘Naked Lunch’ .”

CFI Education. " Double Entry ."

American Institute of CPAs. " The Uniform CPA Examination ." Page 9.

Historyplex. " Barter Services—History of Barter System ."

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The Brief History of Accounting [Notes with PDF]

What is the brief history of accounting.

If you want to learn something thoroughly, you must first learn about its past history. History provides a complete picture of every situation.

As a result, in this post, we will learn a brief history of accountin g so that you can quickly grasp and understand the history of accounting.

Accounting has evolved to its present state as a result of evolution and demand.

From the beginning of time until now, when the world’s civilization has developed and the method of production, trade and distribution of goods has been implemented, the accounting system has been introduced in its own unique way and context.

It is thought that sometime around 1340 , accounting was introduced between the ancient Chinese civilization, the Babylonian civilization, the Indian civilization, and the Egyptian civilization.

1.Primitive Age or Development Period (Pre-1494):

The period from the dawn of civilization to 1494 has been classified as the development period or primitive age.

People used to live in forests and mountain caves. Inside the cave, they collected the necessary food and carved it on the cave, or by drawing pictures or making marks on the rocks, to keep track of the number of fruits collected and the number of prey.

Basically, the foundation of accounting was laid from this calculation.

People used to cut the marks on the walls of their houses and tie the knots on the ropes, cut the marks on the bamboo, and save the accounts of their crops and livestock during this time period.

People began to adopt various occupations to earn a living as society evolved and the scope of human economic activities expanded.

Some chose farming as a profession, while others chose hunting or animal husbandry. The farmer requires meat, and the hunter requires grain. As a result, trade in goods began.

In China at the time, a type of instrument known as an abacus was used in accounting.

During the hunting era, leather was used as currency. The professional merchant class did not emerge until after the invention of currency, and the currency was introduced as a medium of exchange.

2. Second Stage or Pre-Analytical Period (1494-1800):

With the expansion of trade and commerce comes the complexity of business trade and the need to apply specific policies in accounting.

In the last chapter of this book, he discovered the basic method of accounting or the formula for determining the debit credit of a transaction.

3. Third Stage or Analytical Period (1800-1950):

As a result, accounting research was started to solve these problems and new theories were discovered. Basically, the path of modern accounting started from this era.

4. Current or Modern Period (Post 1950):

The scope of accounting activities increases. In the changed situation, accounting is in great demand for information and various stakeholders are starting to rely on accounting for information.

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History of Accounting From Ancient Times to Today

The Medieval and Renaissance Revolution of Bookkeeping

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Accounting is a system of recording and summarizing business and financial transactions. For as long as civilizations have been engaging in trade or organized systems of government, methods of record keeping, accounting, and accounting tools have been in use.

Some of the earliest known writings discovered by archaeologists are accounts of ancient tax records on clay tablets from Egypt and Mesopotamia dating back as early as 3300 to 2000 BCE. Historians hypothesize that the primary reason for the development of writing systems came out of a need to record trade and business transactions.

Accounting Revolution

When medieval Europe moved toward a monetary economy in the 13th century, merchants depended on bookkeeping to oversee multiple simultaneous transactions financed by bank loans. 

In 1458 Benedetto Cotrugli invented the double-entry accounting system, which revolutionized accounting. Double-entry accounting is defined as any bookkeeping system that involves a debit and/or credit entry for transactions. Italian mathematician and Franciscan monk Luca Bartolomes Pacioli, who invented a system of record keeping that used a memorandum , journal, and ledger, wrote many books on accounting.

Father of Accounting

Born in 1445 in Tuscany, Pacioli is known today as the father of accounting and bookkeeping. He wrote Summa de Arithmetica, Geometria, Proportioni et Proportionalita ("The Collected Knowledge of Arithmetic, Geometry, Proportion, and Proportionality") in 1494, which included a 27-page treatise on bookkeeping. His book was one of the first published using the historical  Gutenberg press , and the included treatise was the first known published work on the topic of double-entry bookkeeping.

One chapter of his book, " Particularis de Computis et Scripturis " ("Details of Calculation and Recording"), on the topic of record keeping and double-entry accounting, became the reference text and teaching tool on those subjects for the next several hundred years. The chapter educated readers about the use of journals and ledgers; accounting for assets, receivables, inventories, liabilities, capital, income and expenses; and keeping a balance sheet and an income statement. 

After Luca Pacioli wrote his book, he was invited to teach  mathematics  at the Court of Duke Lodovico Maria Sforza in Milan. Artist and inventor  Leonardo da Vinci  were one of Pacioli's students. Pacioli and da Vinci became close friends. Da Vinci illustrated Pacioli's manuscript  De Divina Proportione ("Of Divine Proportion"), and Pacioli taught da Vinci the mathematics of perspective and proportionality.

Chartered Accountants

The first professional organizations for accountants were established in Scotland in 1854, starting with the Edinburgh Society of Accountants and the Glasgow Institute of Accountants and Actuaries. The organizations were each granted a royal charter. Members of such organizations could call themselves "chartered accountants."

As companies proliferated, the demand for reliable accountancy shot up, and the profession rapidly became an integral part of the business and financial system. Organizations for chartered accountants now have been formed all over the world. In the U.S., the American Institute of Certified Public Accountants was established in 1887.

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History of Accounting

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Patrick Omagbon

This paper attempts to analyze the conceptual development of accounting vis-à-vis the evolution of cost accounting and management accounting from the general accounting system. It also looked into the evolution and promotion of international accounting bodies. The investigation so far revealed that the historical evolution of modern day accounting, from all evidence date to 1211 A.D. when Italian bank was said to have kept a complete double-entry books of accounts. In the light of this therefore, we concluded that the invention of double-entry bookkeeping cannot be ascribed to any individual.

Michael Gaffikin

This paper describes the development of what has been regarded as accounting theory concentrating largely on that in the first 70 years of the 20th century. It demonstrates that a major motivation for this theory was the generally accepted belief in the need for greater conceptual rigour in accounting theory and research. A major part of this theorising was designed to solve a major accounting problem, viz accounting in periods of changing prices, notably inflation. In examining this early theorizing the paper describes the elements of theories and their use by academic theorists, practitioner theories and theories from various committees.

Vlora Berisha

Accounting as a practice has existed since the earliest times of humanity. The first simple accounting records are found in the writings of Babylonian, Chaldeans, Assyrians and Sumerians in Mesopotamia. The time of theoretical accounting recognition is considered to be the year 1494, when Venetian mathematician Luca Pacioli published a book titled ?Summary of arithmetic, geometry, proportions and proportionality?. In addition to mathematical knowledge, Pacioli also wrote about the dual registration method and the accounting process. Despite Paciolli‘s writing, there is still much discussion regarding the issue of dual accounting origin. In reviewing the literature, it is noteworthy that accountancy history is scarcely addressed; there are only a small number of books and works that cover the topic. Therefore, the purpose of this paper is to take a historical look at accounting development from ancient periods to the present. This study, based on historians? records and archaeologist...

Osman Sirkeci , Osman Sirkeci

The aim with this study, "Preaccounting History Roots" title presented on "Accounting: View From The Past Into The Future" named International Scientific Conference in Saint-Petersburg on 11-12 April 2013 and "Cornerstones of Accounting History" title presented in Istanbul on May 2010 with The 2nd Balkans and Middle East Countries Auditing and Accounting History Conference dealt with preaccounting history is intensified in parallel with the innovations of civilization and the title of the new Anthropology studies and other interdisciplinary fields. The originality of the study, especially the "History of accounting is as old as civilization" approach is at perspective made sense to provide. Hence with the help of recent reviews and discoveries addressing the study of accounting or account problem with Paleolithic Age history of the thematic, chronological, social, dialectical and geographically specific areas are examined and discussed with details. The findings of this study contributes clearly to the provision of information to users in the light of scientific developments examined accounting and accounting activities of the human history of the origins and evolution of the process of producing intelligent and tools, and new findings. Now, in the light of the findings obtained and based on data from Paleolithic Age quest of existence of intelligent people and the findings interpreted the signs left behind in the process comments. Thus, historical information of the accumulation of actual accounting with as a contribution to the future arises occurs as more successful integration. Implications for the study are discussed on homo sapiens sapiens who live in peace with himself lines the walls of the cave, and marks the bones-shell-stones with the notches, rope-like instruments taken by nodes in the account until the grasp of life, and make it easier for control signs, symbols in the formation and operation phases. Key Words: Preaccounting, Preaccounting History, Accounting, Accounting History

Foundations and Trends® in Accounting

Gregory Waymire

Christopher Napier

Purpose – To revisit the special issue of Accounting, Auditing & Accountability Journal published in 1996 on the theme “Accounting history into the twenty-first century”, in order to identify and assess the impact of the special issue in shaping developments in the accounting history literature, and to consider issues for future historical research in accounting. Design/methodology/approach – A retrospective and prospective essay focusing on developments in the historical accounting literature. Findings – The special issue’s advocacy of critical and interpretive histories of accounting’s past has influenced subsequent research, particularly within the various research themes identified in the issue. The most significant aspect of this influence has been the engagement of increasing numbers of accounting historians with theoretical perspectives and analytical frameworks. Research limitations/implications – The present study examines the content and impact of a single journal issue. It explores future research possibilities, which inevitably involves speculation. Originality/value – In addressing recent developments in the literature through the lens of the special issue, the paper emphasises the unifying power of history and offers ideas, insights and reflections that may assist in stimulating originality in future studies of accounting’s past.

Accounting Historians Journal

Stephen Walker

Recent studies of publication patterns in accounting history portray a myopic and introspective discipline. Analyses reveal the production and dissemination of accounting history knowledge which focus predominantly on Anglo-American settings and the age of modernity. Limited opportunities exist for contributions from scholars working in languages other than English. Many of the practitioners of accounting history are also shown to be substantially disconnected from the wider community of historians. It is argued in the current paper that interdisciplinary history has the potential to enhance theoretical and methodological creativity and greater inclusivity in the accounting history academy. A practical requirement for this venture is the identification of points of connectedness between accounting and other historians. An analysis of publications with accounting content in Historical s reveals increasing interest among historians in the history of accounting. This substantial litera...

Francois Coetzee

Contemporary corporate history demonstrates that, though accounting is acknowledged as the language of business, there are more and more cases where this language becomes an incomprehensible foreign language. The objective of accounting as promulgated by accounting regulators is characterized by large volumes of complex principles, which none but the most specialised accounting professionals can interpret. This very often results in many classes of accounting information users not being able to properly understand the message being conveyed. This paper aims to reflect on the primary objective of accounting by considering its historic evolution from its ancient roots as a record keeping function, through its bookkeeping phases up to when it actually began to resemble accounting as we know it in the contemporary business environment. Throughout this reflection, consideration is given to its intended purpose for the specific time period under consideration. The paper concludes that eve...

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The history of how humans invented accounting

Curious about the origins of accounting? Delve into our bite-size, captivating history of accounting and its human inception.

Accounting’s history can be traced back thousands of years to the cradle of civilisation in Mesopotamia and is said to have developed alongside writing, counting and money. The early Egyptians and Babylonians created auditing systems, while the Romans collated detailed financial information.

Some of the first accountants were employed around 300 BC in Iran, where tokens and bookkeeping scripts were discovered. Around the first millennium the Phoenicians invented an alphabetic system for bookkeeping, while the ancient Egyptians may have even assigned someone the role of comptroller.

Italian roots

But the father of modern accounting is Italian Luca Pacioli, who in 1494 first described the system of double-entry bookkeeping used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et Proportionalita. While he was not the inventor of accounting, Pacioli was the first to describe the system of debits and credits in journals and ledgers that is still the basis of today's accounting systems. With the onset of the industrial revolution in 1760, there was a proliferation of companies and the need for more advanced accounting systems. The development of corporations also created larger groups of investors, and more complex structures of ownership, all requiring accounting systems to adapt.

Scotland modernises accounting

The modern profession also has its roots in Scotland in the mid-1800s when the Institute of Accountants in Glasgow petitioned Queen Victoria for a Royal Charter, so accountants could distinguish themselves from solicitors, as for a long time accountants had belonged to associations of solicitors, which would offer accounting in addition to a firm’s legal services. In 1854 the institute adopted ‘chartered accountant’ for its members, a term and demarcation that still carries legal weight globally today.

The petition was signed by 49 Glaswegian accountants, and it argued that the accounting profession had long existed in Scotland as a distinct profession of great respectability and that the small number of practitioners had been rapidly increasing. The petition further highlighted the varied skills required to be a professional accountant – in addition to mathematical skills, an accountant needed to be acquainted with general legal principles, as they were often employed by the courts to give evidence on financial matters – as they still are today.

Industrial revolution

By the mid-1800s, the industrial revolution in Britain was well underway and London was the financial centre of the world. With the growth of the limited liability company and large-scale manufacturing and logistics, demand surged for more technically proficient accountants capable of handling the growingly complex world of global transactions.

The increasing importance of accountants helped to transform accounting into a profession, first in the UK and then in the US. In 1904 eight people formed the London Association of Accountants to open the profession to a wider audience of people than was available through the UK’s older associations. After several name changes the London Association of Accountants adopted the name the Association of Chartered Certified Accountants (ACCA) in 1996.

Importance of ethics

It’s not all been plain-sailing for the accountancy profession. The 21st century has seen some dubious actions by accountants causing large-scale scandals. The Enron scandals in 2001 shook the accounting industry, for example. Arthur Andersen, one of the world’s largest accounting firms at the time, went out of business. Subsequently, under the newly introduced Sarbanes-Oxley Act, accountants now face harsher restrictions on their consulting engagements. Yet ironically, since Enron and the financial crisis in 2008, accountants have been greatly in demand, as corporate regulations have increased and more expertise is required to fulfil reporting requirements.

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2 (page 13) p. 13 The international evolution of accounting

• Published: March 2014
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What are the purposes of accounting? How do these purposes affect how accounting works? What is double-entry bookkeeping? ‘The international evolution of accounting’ considers these questions and outlines some examples of how different countries have contributed to the development of accounting. Double-entry bookkeeping, conceived in thirteenth-century Italy, balances the debits and credits. It enables the calculation of profit and the presentation of a business's financial position. Publication of accounting information is required to protect shareholders and creditors from potential malpractice by company directors. The globalization of world business has resulted in International Financial Reporting Standards, now used by around 90 countries. The US use their Financial Accounting Standards Board's ‘generally accepted accounting principles’.

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Introduction: The Scope and Historical Background of Accountancy

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• Robin John Limmack 2  

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The use of accountancy and accounting information permeates all aspects of modern society. We could not live in the type of world we know today without accountancy. Decisions made on the basis of accounting information affect the lives of countless millions in one way or another, whether at the individual level in the pricing of particular commodities or in wage negotiation, or at the macro level involving the economic strategies of governments. The rules governing accountancy are considered sufficiently important as to warrant government intervention from time to time, whether in the form of legislation or in the appointment of committees to consider special issues. 1

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Notes and References

J. B. Sykes (ed.) The Concise Oxford Dictionary , 6th edition (Oxford: Clarendon Press, 1976) p. 8.

Google Scholar  

E. L. Kohler, A Dictionary for Accountants , 4th edition (Englewood Cliffs NJ: Prentice-Hall, 1970) p. 6.

Ibid., p. 7.

For a more complete description of the case, see E. Woolf, Auditing Today , 2nd edition (London: Prentice-Hall/International, 1979) pp. 380–85.

S. Paul Garner, Evolution of Cost Accounting to1925 (University of Alabama Press: Alabama, 1976) p. 2.

See H. R. Hatfield, ‘An Historical Defence of Book-keeping’, p. 2. The paper was first presented to the American Association of University Instructors in Accounting on 29 December 1923 and has since been reprinted in a number of compilations including W. T. Baxter and S. Davidson (eds), Studies in Accounting , 3rd edition (London: Institute of Chartered Accountants in England and Wales 1977) pp. 1–10.

Luca Pacioli, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Venice, 1494).

B. S. Yamey, on p. 7 of the introduction to Studies in the History of Accounting , B. S. Yamey and A. G. Littleton (eds). (First printed in 1956 by R. D. Irwin, Homewood, Ilinois, reprinted by Arno Press Inc., New York, 1978.)

B. S. Yamey, ‘The Development of Company Accounting Conventions’, in T. A. Lee and R. H. Parker (eds), The Evolution of Corporate Financial Reporting (London: Nelson, 1979) p. 234.

Ibid., p. 235.

Lee v. Neuchatel Asphalte Co . (1889) 41 Ch.D. 1.

Verner v. General and Commercial Investment Trust (1894) 2 Ch.D. 239.

W. H. Beaver, Financial Reporting: An Accounting Revolution (Englewood Cliffs, N.J.: Prentice-Hall, 1981) p. 2.

Ibid., p. 18.

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Limmack, R.J. (1985). Introduction: The Scope and Historical Background of Accountancy. In: Financial Accounting and Reporting. Palgrave, London. https://doi.org/10.1007/978-1-349-17898-8_1

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History of Accounting: A Resource Guide

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The resources on this page provide a historical overview of the accounting profession. Materials for looking at the history of particular firms and individuals are elsewhere in this guide. We have not included all accounting and auditing periodicals and newsletters. Some previously published titles like The Practical Accountant , Emerson's Professional Services Review , The Accounting Historians Journal , Taxes , and The Accounting Review are not included if they no longer publish, their focus is not on current practice, or their coverage is not exclusively accounting and auditing. Their content may still live through subscription databases, reprint services, or in print collections.

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