|
|
Accounting History
Accounting is the profession involved with recording, classifying, analyzing and interpreting the financial affairs of business. In fact, accounting has been referred to as “the language of business”
People in all civilizations have maintained various types of records of business activities. In fact, the oldest known are clay tablet records of the payment of wages in Babylonia around 3600 BC. There are numerous evidences of record keeping and systems of accounting control in ancient Eygpt and in the Greek city-states. The earliest known English records were compiled at the direction of William the Conqueror in the eleventh century to ascertain the financial resources of the kingdom.
Today, the foundational concept of accounting is based on a principle of “double-entry accounting.” It is the most fundamental of concepts that is first taught to any aspiring student in accountancy. This revolutionary concept had its early influences by Venetian merchants. The first known written description of the “double-entry” system was first published in 1494 by a Franciscan monk named Luc Pacioli, a mathematician who taught in various universities in Perugia, Naples, Pisa and Florence. As evidence to the position that Pacioli occupied among the intellectuals of his day was his close friendship with Leonardo da Vinci, with whom he even collaborated on a mathematics book. Pacioli wrote the text while da Vinci prepared the illustrations.
The genius of the “double-entry” system is a self balancing set of accounts into which all financial transactions are recorded in various combinations, but will always affect a minimum of at least two accounts. It is this self balancing concept that provides for the accuracy and built in controls that allow financial transactions to be consistently and uniformly recorded into a format that then allows for the preparation of the most basic of financial statements used by any business: the balance sheet and the income statement (or commonly called a profit and loss statement)
Even though accounting has evolved into a far more complex and sophisticated science, that basic concept of the double-entry system is still the foundation in place today and has not changed in hundreds of years. All business accounting systems have this at their core level – including QuickBooks which, of course, is so popular with businesses today. It's just that QuickBooks handles most of the accounting logic "behind the scenes".
|
Design & site content by Les Bahr, CPA
© 1996, 2008 Miller, Bahr & Wills, P.C.
Miller, Bahr & Wills, P.C.
