The History of Accounting

Who came up with the idea of accounting and
what was the reason they created it? Was it the cavemen, the ancient Egyptians or even
your great ancestors? I’m Thomas Harwood and Welcome to The Accounting
Student, where we create free and short videos so that you can learn about accounting. Today’s video is looking at the history
of accounting. Millions of years ago, when the human life
started to appear on the face of the earth things were a lot different compared to what
they are today. There was no money, jobs, technology and most significantly no accounting! Around tens of thousands of years ago, the
humans started to evolve and some started to acquire new skills. They would use their
skills for a service in exchange for something that another human had. This is Example Time! This is where we put
the theory into so called real life examples. This is to try and increase your understanding
of the topic and theory. About ten thousand years ago, Harry the hunter
was very good at catching animals. Harry would catch animals for other humans,
like Woody, in exchange for what he needed. Harry would exchange an animal or two for
some of the wood of Woody’s. Harry would then have some materials to build a home or
even a weapon for protection. While on the other hand; Woody would have animals so that
he could feed his family. As the humans continued to evolve, humans
like Harry wanted to keep records of their exchanges. It is believed that records associated with
accounting and business started to exist around ten thousand years ago and that accounting
had been practised in ancient times in places such as Egypt, India and Rome. After a few thousands years later, there was
still little development and adoption of accounting records and methods globally. Until 1494, an Italian by the name of Luca
Pacioli wrote and published a book. The book includes a section called “Details of Calculation
and Recording” and many refer to this as the basis of double entry in modern accounting. Additionally, terms in modern accounting like
debit, credit, journal and ledger all originate from this book. Back to Example Time. As the humans continued to evolve, so came
civilisation and in the middle ages trade and business grew and accounting became more
important. Mike a merchant and relative of Henry the
hunter was starting to grow like many businesses at that time. However, a big problem was that
he did not know how much was owed to him and how much he owed to others. A business like this at this time could cause
Mike to lose his business, home and other assets. This is where accounting thrived because
businesses decided to hire agents, later known as “bookkeepers” to record details of
transactions, receipts and payments. Mike would then hire a bookkeeper of his own
and this then allowed merchants like him to become a respectable and successful business
during the middle ages. After a couple of hundreds of years, some
businesses became big whereby managers where separate from owners and owners often had
no involvement in day-to-day trading. This started to form the accounting and auditing
profession. And in 1581 the first association of accountants were established in Venice
called the Collegio dei Rexonati. Then in 1854, the first national body of accountants
were formed called the Institute of Chartered Accountants of Scotland. This was followed
by the formation of the English Institute of Chartered Accountants and US national accounting
body in 1880 and 1887 respectively. Today in 2016, accounting is very important
in a highly competitive business world and, auditing as well, is becoming more vital with
high profile accounting and financial scandals in recent years. Ending So that was the history of accounting. If
you enjoyed it, press the like button. If you have a question you want answered leave
it in the comments below and we’ll try to answer it. And if you’re not already subscribed make
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Student. Thanks for watching we’ll see you next time.

5 thoughts on “The History of Accounting

  1. Hi I am asking if you can make a video about the development of the accounting thought in terms of its philosophical sense. The philosophies behind the practice of accountancy. Thank you so much.

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