A Brief Look at the History of Accounting

It is like the age-old question, which came first, the chicken or the egg. On the surface it seems like a question that cannot ever be answered with any degree of certainty. The same is true when it comes to the origins of human writings. Many archaeologists believe that the first marks ever written down were actually used to keep account of all manner of possessions more than five millennia ago.

Whether the numbering system preceded the writing down of words or not, one thing is absolutely clear, the ability to keep account of transactions throughout the growth of human civilization is one of the most significant factors that distinguishes us from the animals. In fact, the keeping of numbers can be directly connected to the governing of mankind in general.

Ancient Accounting Methods

Probably the earliest bookkeeping records found by archaeologists are the royal books that detailed the inventory of the royal storehouses. Labels made from bone fragments dating back more than 5,000 years have been discovered in the Egyptian tomb of King Scorpion I. These labels are considered to be the very origin of the accounting systems that we use today.

Banking records were also found in Ancient Grecian sites detailing banking activities of all sorts including the borrowing and lending of money, and in Ancient Rome records were uncovered showing the financial transactions of heads of state.

14th Century Accounting

By the 14th century, Italian Luca Pacioli, who was considered to be the father of modern accounting, introduced the double-entry bookkeeping system. Pacioli’s system is believed to be the first system to incorporate Arabic numbers rather than the older Roman numerals that are far more complicated. This system became common accounting practice for several centuries.

19th Century Accounting

Modern accounting methods emerged in the 19th century when Queen Victoria of Scotland granted a royal charter to establish the Institute of Accounting in Glasgow. The program was to train students to be professional accountants.

Later in the century, accountants were brought to the US from Scotland and Britain to audit British investments held in the west. These professionals opted to remain in the states and set up their own accounting practices and services becoming the first of a number of US accounting firms. The first national accounting society in the US was established in 1887.

20th Century Accounting

From then on, the accounting profession grew. Governmental regulations were put into place first with state requirements for recording financial statements and later, Federal requirements. The passing of the Securities Acts in 1933 and again in 1934 laid the foundation for the Securities and Exchange Commission.

The need for more reliable and accurate financial reporting led to the establishment of the FASB (Financial Accounting Standards Board) in 1973. The FASB and the GASB (Governmental Accounting Standards Board) are now the two primary organizations responsible for regulating today’s most common accounting principles.

Accounting in the 21st Century

The accounting world is still going through refinements in the 21st century. With the passage of the Dodd-Frank Act in 2008, 16 areas of reform were put into place ensuring financial stability by restricting the role of banks in many areas that could result in their gaining profit at the expense of others.

The world of accounting has seen many changes over the years and is expected to see even more in the future. Without these changes over time and the reliability of governing bodies to keep in regulated the picture of our world economy could be quite different.


  • http://www.accountingedu.org/history-of-accounting.html
  • https://www.boundless.com/users/235420/textbooks/business-fundamentals/financial-and-managerial-accounting-financing-your-organization-9/why-an-accounting-system-is-important-43/a-short-history-of-accounting-and-double-entry-bookkeeping-206-15509/

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