Part 2 - Ancient Accounting: Dawn of Man through Luca Pacioli

In attempting to explain why double entry bookkeeping developed in 14th century Italy instead of ancient Greece or Rome, accounting scholar A. C. Littleton describes seven “key ingredients” which led to its creation.

• Private property: The power to change ownership, because bookkeeping is concerned with recording the facts about property and property rights.
• Capital: Wealth productively employed, because otherwise commerce would be trivial and credit would not exist.
• Commerce: The interchange of goods on a widespread level, because purely local trading in small volume would not create the sort of press of business needed…

Part 3 - Accounting In Mesopotamia, circa 3500 B.C.

Five thousand years before the appearance of double entry, 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 floodings made the valley an especially rich area for agriculture.

As farmers prospered, service businesses and small industries developed in the communities in and around the Mesopotamian Valley. The cities of Babylon and Ninevah became the centers for regional commerce, and Babylonian became the language of business…

Part 4 - Accounting In Ancient Egypt, China, Greece and Rome

Governmental accounting in ancient Egypt developed in a fashion similar to the Mesopotamians. The use of papyrus rather than clay tablets allowed more detailed records to be made more easily. And extensive records were kept, particularly for the network of royal storehouses within which the “in kind” tax payments were kept.

Egyptian bookkeepers associated with each storehouse kept meticulous records, which were checked by an elaborate internal verification system. These early accountants had good reason to be honest and accurate, because irregularities disclosed by royal audits were punishable by fine, mutilation or death. Although such…

Part 5 - Medieval Accounting

The thousand years between the fall of the Roman Empire and the publication of Luca Pacioli’s Summa are widely viewed as a period of accounting stagnation, and medieval practices outside Italy are often ignored in historical summaries. Yet, as historian Michael Chatfield has observed, medieval agency accounting, “laid the foundations for the doctrines of stewardship and conservatism, and the medieval era created the conditions for the rapid advance in accounting technology that occurred during the Renaissance.”

While accounting under the Roman Empire was prescribed by the centralized legal codes of the time, medieval bookkeeping was…

Part 6 - Ancient Accounting: Dawn of Man through Luca Pacioli

The innovative Italians of the Renaissance (14th - 16th century) 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…