History of accounting

The history of accounting shows how the discipline has evolved over time and how useful it has been for the development of mankind.

Thus, since ancient times, accounting has been used for many different situations. We were obliged to keep records of food, resources or money, and so this essential part of economics came into being. Without it, society would not have been able to advance in many aspects.

History of accounting: 6,000 BC

By 6,000 BC, there were certain factors that gave birth to this technique of economic record-keeping. Hunters, farmers or shepherds had to know data about their activities, and this, together with the appearance of writing and numbers, gave rise to an ancestor of accounting.

There are known clay tablets of Sumerian origin that were found in Mesopotamia. Moreover, Egyptian scribes were the accountants of the time, the ancestors of today’s accountants. Greece, with its intellectual, political and social advances, allowed the development of this activity.

Of course, we cannot forget Rome, which, although scarce, created some related works. In those times, the Romans, above all, wrote about laws. Roman law was inherited by many countries and helped to regulate accounting activity.

History of accounting: From the Middle Ages to the present day

In the Middle Ages, feudalism meant a partial closure of trade. However, the feudal lords, assisted by monks, had to keep accounts of the production of their lands. Genoa, Venice and Florence (in Italy) were more than important in the history of accountancy.

The Renaissance saw important advances in the art of accounting. In fact, as we will see below, the accounting technique that revolutionised this activity, the double entry, appeared. In fact, even earlier, in Genoa, there was already talk of debit and credit or cross entries.

History of accounting: From single to double-entry bookkeeping

Benedetto Cotrugli, from Dalmatia, was the forerunner of what Luca Pacioli would later develop, the double entry system. It appears in his work Della mercatura et del mercante perfetto, completed in 1458 and printed in 1573. His discovery was essential for the development of modern accounting as we know it today.

Broadly speaking, since both concepts have been developed in Economipedia, there are important differences between the two.

The simple entry is just a notation. It is also called a cash register, a register of receipts and disbursements. At the end, it provides a balance of these transactions. It only reflects one account at a time.

Double entry goes further. It makes it possible to deal with two or more account types in the same entry. In this way, thanks to the relationship of the so-called journal of entries with the general ledger, accounting becomes much simpler.

Modern accounting

Technology and the use of specific computer programmes, as well as the appearance of the Internet, have meant a significant advance in this activity. The different countries of the world have been able to handle the management of large volumes of data in a simple way.

On the other hand, the daily entries are reflected in the so-called balance sheets and trial balances or income statements. These are the most relevant ones, but there are others, such as those related to equity or cash. All of them are easily calculated with accounting software. In addition, cloud storage makes it possible to work anywhere.

Finally, it should be mentioned that there are significant differences in the way of accounting in different countries. Especially between the Anglo-Saxon countries and the rest. However,  all of them use double entry and, in most of them, the history of accounting has had a similar evolution.