The History of Early Accounting

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The Early Years of Accounting

Accounting is as old as humanity itself. Indeed, since man is man, and even long before knowing the script, it’s needed to keep accounts, to save memory and record data on their economic life and its heritage. Assets gathering, hunting, being prepared, consumed and possessed; stored goods; goods lent or alienated; property that was in administration; etc. are all phases that have needed to be completed.

In this regard, recent research such as Denise Schmandt-Besserat and, above all, Hans Nissen, Peter Damerow and Robert Englund (1990), archaeologists, and historians of ancient Mesopotamia, support the conclusion that the first written documents known, consisting of thousands of clay tablets, developed over 5,000 years ago, contain only numbers and accounts, without words.

This does conclude the researchers said that writing must have come by the year 3300, to meet the need felt by the ancient inhabitants of Mesopotamia to register and record their accounts. There was therefore a desire to bequeath to posterity the memory of warlike exploits, stories of heroes or gods, or to translate legal rules for permanent record and compliance, which led to the birth of writing, as previously thought but quite simply the need to collect and retain accounts originated as a result of productive and administrative processes.

Since those early days, accounting activities have been going on continuously, but only from the fourteenth and fifteenth century’s, written records with a regular and relatively abundant character. The data contained in the accounting documents, even the oldest and fragmentary, are quantitative and precise. They may not be able to be presented as a coherent whole, complete and intimately interrelated, but their study and interpretation shed an entirely new and often unexpected light on historical facts.

The vision of the progress of business and accounting activities remained essentially didn’t change until the eleventh or twelfth centuries. From these dates, new elements were gradually introduced. Full integration, however, is not achieved until the late thirteenth or early fourteenth century with the discovery of the double-entry bookkeeping. This accounting system, which is still used today, alongside computer technology, is used as an irreplaceable method, enjoying the same vigour that was seen in their heyday.

It integrates and interrelates all the elements that constitute the patrimonial heritage, Safety , Commodities, Debtors, Creditors, etc.., recording both changes in equity structure, i.e., increases, for example, Goods with a corresponding reduction of the Fund due to a cash purchase of those, such as variations in the total volume of assets, represented by the Capital account. This was precisely the great innovation of double entry, as the above embodiments only recorded changes in equity structure. From our perspective the question may seem obvious and elementary, and perhaps it is, but the fact is that the completion of the new approach required centuries of effort and error, constituting a real conceptual revolution, a change in accounting philosophy.

The full all-encompassing natures of double-entry bookkeeping meant additional measures were needed to ensure the reliability of the books. So, it was established that the typical books were bound, did not contain erasures, no sheets or blank spaces were left, etc., all in order that they could not enter new leaves and replaced the original.

Although in the sixteenth, seventeenth and eighteenth centuries there are works that try to evaluate accounting and bookkeeping, they contain no reference to specific aspects of the history of accounting techniques or references to any particular author. The systematic study of the history of accounting proper begins later in the mid-nineteenth century.

In its early days, until the end of the first third of the twentieth century, the history of accounting is seen primarily as the study of authors and accounting treaties of the past, although there are few studies on books of accounts. The absolute priority is the development of accounting techniques and the identification and marking of the developments taking place within them. Without these distinguished predecessors, great businesses today and accountants such as The Cheap Accountant wouldn’t be around.

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