The history of accounting I feel is important in the learning, understanding, and developing of my foundation for my accounting career. In this report you will learn about the development of accounting. You will learn about the people who influenced accounting the most throughout the years. You will learn how accounting came about and how it was used in the ancient times. You will learn about the invention of the double-entry bookkeeping processes. You will learn how things were done before the birth of the double-entry bookkeeping process. You will learn about Luca Pacioli and the Summa. You will also learn about modern accounting and ACAUS.

In attempting to explain why double entry bookkeeping developed in fourteenth century Italy instead of ancient Greece or Rome, accounting scholar A.C. Littleton describes seven "key ingredients" which led to its creation. Those key ingredients consisting of private property, capital, commerce, credit, writing, money and arithmetic. Most of these did not exist in ancient times. This alone would not lead someone to create a complete and involved accounting system. Writing, for example, is as old as civilization itself, but arithmetic - the systematic manipulation of number symbols - was really not a tool possessed by the ancients. Fairly, the persistent use of roman numerals for financial transactions long after the introduction of Arabic numeration appears to have delayed the earlier creation of double-entry systems. However, the problems encountered by the ancients with record keeping, control and verification of financial transactions was not entirely different than our own today. Governments had strong incentives to keep careful records of receipts and disbursements - for the most part as concerns taxes. In any society where individuals accumulated wealth, there was a desire by the rich to perform audits on the honesty and skill of slaves and employees entrusted with asset management. But the lack of the above-listed antecedent to double entry bookkeeping made the job of an ancient accountant extraordinarily difficult. In societies where nearly all were illiterate, writing materials costly, numeration difficult and money systems inconsistent, a transaction had to be extremely important to justify keeping an accounting record.

Accounting in ancient Mesopotamia, Circa 3500 B.C. five thousand years before the appearance of the double entry system was done in a different manner . The Assyrian, Chaldaean-Babylonian and Sumerian civilizations were flourishing in the Mesopotamian Valley, producing some of the oldest known records of commerce. In this area between the Tigris and Euphrates Rivers, now mostly within the borders of Iraq, periodic flooding made the valley an especially rich area for agriculture. When farmers started to prosper, service businesses and small industries developed in the communities in and around the Mesopotamian Valley. The cities of Babylon and Nineveh became the centers for regional commerce, and Babylonian became the language of business and politics throughout the Near East. There was more than one banking firm in Mesopotamia, employing standard measures of gold and silver, and extending credit in some transactions. During this time period (which lasted until 500 BC), Sumeria was a theocracy whose rulers held most land and animals in trust for their religious beliefs, giving drive to their record-keeping efforts. Furthermore, the legal codes, which emerged, penalized the failure to memorialize transactions. The renowned Code of Hammurabi, handed down during the first dynasty of Babylonia (2285 - 2242 BC), for example, required that an agent selling goods for a merchant give the merchant a price quotation under seal or face invalidation of a questioned agreement . It is also believed that most transactions were recorded and subscribed by the parties during this period. The closest thing they had to an accountant in these times was a scribe. The scribes duties were writing up the transaction, he ensured that the agreements complied with the detailed code requirements for commercial transactions. The temples, palaces and private firms employed hundreds of scribes, and it was considered a prestigious profession. In a typical transaction of the time, the parties might seek out the scribe at the gates to the city. They would describe their agreement to the scribe, who would take from his supply a small quantity of specially prepared clay on which to record the transaction. Clay was plentiful in this area, while papyrus was scarce and expensive. The moist clay was molded into a size and shape adequate to contain the terms of the agreement. Using a wooden rod with a triangular end, the scribe recorded the names of the contracting parties, the goods and money exchanged and any other promises made. The parties then "signed" their names to the tablet by impressing their respective seals. In an age of mass illiteracy, men carried their signatures around their necks in the form of stone amulets engraved with the wearer's mark, and buried with them at death. Often the seals included the owner's name and religious symbols, after these impressions from the amulets were made, the scribe would dry the tablet in the sun (or in a kiln for important transactions which needed a more permanent record). Sometimes clay layer about as thick as piecrust, was fashioned and wrapped around the tablet to protect it like an envelope. Sometimes for extra security, the whole transaction would be rewritten on this outer "crust," in effect making a carbon copy of the original. Attempted alterations of the envelope could be detected by comparing it with its contents, and the original could not be altered without cracking off and destroying the outer shell such as the picture and name of the gods worshipped by the owner.

Accounting in ancient Egypt, Greece, and Rome on the other hand were similar in some aspects but different in others. Accounting in ancient Egypt developed in a fashion similar to the Mesopotamians. The use of papyrus over clay tablets allowed more detailed records to be made more easily. Also extensive records were kept, particularly for the network of royal storehouses within which the "in kind" tax payments were kept. Egyptian bookkeepers attached to each storehouse kept careful records, checked by a complex internal verification system. These early accountants had good reason to be honest and accurate, because irregularities disclosed by royal audits were punishable by fine, injury or death. Although such records were important, ancient Egyptian accounting never progressed beyond simple list making in its thousands of years of existence. Perhaps more than any other factors, illiteracy and the lack of coined money appear to have stymied its development.

Greece in the fifth century B.C. used "public accountants" to allow its public to maintain real authority and control over their government's finances. Members of the Athens popular assembly legislated on financial matters and controlled receipt and expenditure of public monies through the oversight of ten state accountants, chosen by lot. Perhaps the most important Greek contribution to accountancy was its introduction of coined money about 600 B.C. Widespread use of coinage took time, as did its impact on the evolution of accounting. Banking in ancient Greece appears to have been more developed than in prior societies. Bankers kept account books, changed and loaned money and even arranged for cash transfers for citizens through affiliate banks in distant cities.

Government and banking accounts in ancient Rome evolved from records traditionally kept by the heads of families, in which daily entry of household receipts and payments were kept in an adversaria or daybook and monthly postings to a cashbook known as a codex accepti et expensi. These household expenses were important in Rome because citizens were required to submit regular statements of assets and liabilities, used as a basis for taxation and even determination of civil rights. An intricate system of checks and balances was maintained in Rome for governmental receipts and disbursements by the quaestors, which managed the treasury, paid the army and supervised governmental books. An audit staff regularly examined public accounts, and quaestors were required to account to their successors and the Roman senate upon leaving office. The transition from republic to empire was at least in part to control Roman fiscal operations and to raise more revenues for the ongoing wars of conquest. While the front wall of republicanism was maintained, the empire concentrated real fiscal and political power in the emperor. Julius Caesar personally supervised the Roman treasury, and Augustus completely overhauled treasury operations during his reign. Among Roman accounting innovations was the use of an annual budget, which attempted to coordinate the Empire's diverse financial enterprises, limited expenditures to the amount of estimated revenues and levied taxes in a manner, which considered its citizens' ability to pay.

The innovative Italians of the Renaissance are widely acknowledged to be the fathers of modern accounting. They elevated trade and commerce to new levels, and actively sought better methods of determining their profits. Although Arabic numerals were introduced long before, it was during this period that the Italians became the first to use them regularly in tracking business accounts - an improvement over Roman numerals the importance of which cannot be overstated. They kept extensive business records, as the use of capital and credit on a large scale developed. The evolutionary trend toward double entry bookkeeping was underway. This brought about Luca Pacioli and the Summa.

Frater Luca Bartolomes Pacioli was born about 1445 at Borgo San Sepulcro in Tuscany. He was a "Renaissance man" acquiring an incredible knowledge of diverse technical subjects - religion,...
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