The earliest evidence of accounting dates back to 3500 BC, when ancient Mesopotamian civilisations kept records of goods that had been traded and received.
They used shapes and basic imprinted illustrations into slabs of clay known as proto-cuneiform. These were used to represent the types of goods that were traded, such as crops, livestock and oil.
Bookkeepers are said to have emerged when society was still using the barter system, around 2000BC. This was the trade of goods without the use of money. These transactions were documented like short narratives, using dates and descriptions of trades or services rendered.
“Monday May, 12: In exchange for three chickens, which I have provided today, Alexander Katsaros(labourer) promised a satchel of seed when the harvest is completed.”
Without the help of modern technology and receipts, plenty of these transactions relied on keeping one’s word, so when disputes arose, proof was able to be provided with written agreements before matters were taken to magistrates. Whilst producing these lengthy agreements seems unnecessary to us, having great amounts of detail was ideal, particularly as these transactions lasted over long periods of time (e.g. before a harvest).
The concept of currency or money itself didn’t emerge for a very long time. Coins were first used around 700 – 500BC, almost 3,000 years after the ancient Mesopotamians.
Around 322 BCE, Indian philosopher and economist Chanakya wrote ‘Arthashastra’, which was a manuscript containing advice on how to maintain records for accounts. This was the earliest guide on how to bookkeep. The Italian mathematician Luca Pacioli published a textbook in 1494 that explained double-entry accounting.
Double entry accounting listed an entity’s resources separately from claims on resources by others, which meant creating the foundation of a modern day balance sheet with separate debits and credits.
Although Luca Pacioli did not invent double entry accounting, he introduced the efficient and reliable method to the rest of the world, and was therefore named the father of accounting.
The modern profession of chartered accounting started in Scotland in the nineteenth century when accountants started to work for the same organisations. In 1853 the Institute of Accountants in Edinburgh was formed. By 1879, a draft petition for a Royal Charter was signed by 49 accountants and was given to the Privy Council.
In 1880, the Royal Charter of Incorporation was granted, but required the signatory bodies to merge to form a new body called the Institute of Chartered Accountants in England & Wales. It was then signed by Queen Victoria, creating ICAEW.
More recently, advancements in accounting have been made with the introduction of technology.Whereas bookkeeping was always entirely kept on paper, computers revolutionised the way in which the data was kept. Programs such as Microsoft Excel allowed spreadsheets to be produced electronically, and they even had the ability to calculate sums within the spreadsheet itself.
Accounting software was then developed specifically for accounting on the computer. Popular software includes QuickBooks, Xero and Sage.
In more recent years, cloud-based systems have gained popularity, allowing accountants to streamline their information anywhere at any time (providing they have an internet connection). These technological advancements have allowed our team at Ryan’s to work from home during the pandemic whilst still staying connected with our clients and each other.
This article has taken a brief look into the history of accounting and as technology is constantly being developed further, we’re sure there will be much more to come in the future!