History of Accounting

Part 1 - Introduction to the History of Accounting

Unlike most other modern professions, accounting has a history that is usually discussed in terms of one seminal event - the invention and dissemination of the double entry bookkeeping processes. But a view of accounting history that begins with Luca Pacioli’s contributions overlooks a long evolution of accounting systems in ancient and medieval times.

More fundamental is the question, why should we care about the history of accounting at all? Certainly a glimpse back into this period helps illuminate our past generally, and it is the sort of winding, twisted path that makes for an entertaining story. But perhaps the most compelling reason is to help explain the phenomenal growth that the profession of accountancy has enjoyed worldwide since the first royal charters were granted to the Society of Accountants in Edinburgh less than 150 years ago.

In 1904, 50 years after the emergence of the formal profession, about 6,000 practitioners carried the title of chartered accountant. In 1957, there were 38,690 chartered and incorporated accountants (Scottish, British and Irish). Today, the Institute of Chartered Accountants in England and Wales alone has a membership of over 120,000 worldwide. This is to say nothing of the many professionals in the other allied institutes in Canada, New Zealand, Ireland, Australia, Scotland and South Africa, along with American certified public accountants - comprising a vast, worldwide network of professional accountancy dominated by several, mammoth, worldwide accounting firms.

How and why did this relatively new profession develop? Its history is that of human commerce, and even more fundamentally, of writing and the use of numbers and counting.

Some argue that accounting developed purely in response to the needs of the time brought about by changes in the environment and societal demands. Others claim that the development of the science of accounting has itself driven the evolution of commerce since it was only through the use of more precise accounting methods that modern business was able to grow, flourish and respond to the needs of its owners and the public. Either way, the history of accounting throws a light on economic and business history generally, and may help us better predict what is on the horizon as the pace of global business evolution escalates.

Obviously this presentation can only be an overview on a subject whose complete bibliography would itself be massive. We have included this on the AccountancyStudents web site because we were aware that there were so few online resources available on accounting history. It is intended only as a brief introduction, to whet the appetite for a more in-depth look that additional reading can provide.

To read through the complete history click on the link below or access a specific historical period by clicking on a link in the right hand column.

Article courtesy of John R. Alexander at Net Gain