8000 BC

The birth of civilization: fortified cities. Ancient Jericho was founded about 8,000 years ago. Salt was mined and available for trade near this Dead Sea site. There is no evidence of intensive (demanding) agriculture at this date (much of their food must have been imported), suggesting that the city was founded primarily as a trading center. 7500 BC Agriculture and tokens--the first accounting records. The domestication of livestock and grains started at different sites about the same time. Simple tokens were associated with agricultural sites, clay balls of various shapes (round, oval, etc.) representing specific goods (e.g, 2 round tokens could be a pair of cattle, 12 oval tokes a dozen units of wheat). This was the first representation of inventory and the beginning of the concept of numbers. 3200 BC Writing. Over the next 5,000 years, accounting records advanced from simple to complex tokens representing inventory, to clay tablets, to the development of abstract symbols and cuneiform writing in Sumeria. This paralleled advances in agriculture, pottery and textiles, building, war and nation-states. 3000 BC Bronze, abacus, & papyrus. Bronze was first used to make tools in the Middle East, the start of the Bronze Age. The abacus was invented in China and later made its way west. Papyrus scrolls were found in Egyptian graves. 2500 B.C. Historical accounting records have been found in ancient civilizations like the Egyptian, Roman, and Greek Empires as well as ancient Arabia. Back then accounting records were kept by rulers for taxing and spending on public works. 2200 BC The Code of Hammurabi. One of the earliest law codes, which standardized weights and measures, commercial transactions and contracts, and criminal penalties. Payments were based on fixed amounts of silver or grain. About this time metal became used as a medium of exchange in the Middle East. 1000 B.C. The Phoenicians created an alphabet with accounting so that they were not cheated through trades with ancient Egyptians. 423 B.C The auditing profession was born to double check storehouses as to what came in and out the door. The reports that were taken by these accountants were given orally hence the name auditor. 7th Century Coins invented in Lydia. It started with crude slugs of electrum (a gold and BC silver alloy) of a standard weight. Later coins were stamped, first with simple lines and then with more complicated designs. 5th Century The development of Greek banking. By 575 BC Athens started to mint coins. BC Financial transactions were made only in coined money. Money changing was the most common financial activity. Bankers accepted deposits and made loans. By 50 BC Roman republic. Rome developed as a republic, ruled largely by the Senate. With the rise of a professional army, Rome successfully conquered neighbors and then much of the Mediterranean world and Europe. Rome was known for engineering marvels that included roads, aqueducts, and buildings. Rome adopted coinage, the abacus, Greek alphabet, "Roman numerals", writing on papyrus, banking & credit. The corporation was established in Rome as an entity that could own property, make contracts, and engage in many activities. 1 AD Roman empire. With the rise of Julius Caesar, the republic was replaced by the empire. At the start of the new era, the age of Augustus was the Pax Romana, an era of peace and prosperity--one definition of the Golden Age of Rome. Augustus reformed the

money and tax systems. Taxes included general sales tax, a land tax, and a flat-rate poll or head tax. 410 Fall of Rome. Rome was sacked by the Visigoths, the Dark Ages began in the West. Local areas became self sufficient and the feudal system developed. Roman rule in the East continued at Constantinople for another thousand years. from 1000 Italian merchants extend trade from England to the Far East and improve bookkeeping. The most successful merchants developed complex trading networks across Europe and the Mediterranean, often using partnerships. Bills of exchange and clearing houses were established in major European trading centers. 1066 Battle of Hastings. William of Normandy conquered England. In 1086 the Domesday Book surveyed the wealth of the kingdom to determine taxes and England's fiscal system. England's legal system and government evolve from Normal rule. 1100 Piscan Document--demonstrated systematic but primative bookkeeping by Italian merchants. 1160-1200 Tally sticks. Tallies evolved into credit instruments in England. Tallies were wooden sticks, notched to represent specific sums of money. The sticks would be split in two to serve as a receipt. These would be used for lending and the English Exchequer issued tally sticks as a form of credit. 1215 Magna Carta--restricted the rights of kings to raise taxes without the consent of the barons. From this beginning, Parliament would be established. By 1300 Double entry bookkeeping. Accounting records of Giovanni Farolfi & Co. documented a complete double entry bookeeping system in place. 1440 Printing press. Gutenberg invented movable type. Printing presses soon expanded across Europe. 1494 Pacioli's Summa--codified double entry bookeeping as the "Venice system". Thanks to Gutenberg's printing press, Summa was printed and spread throughout Europe. Luca Pacioli, the father of accounting, writes his famous paper Everything about Arithmetic, Geometry, and Proportion. The treatise that he writes is mainly a study that Pacioli performs on the common practices of merchants in Venice, Florence, and Milan. He revealed that several merchants kept books of debits which means he owes as well as credits which means he trusts. With this early double entry accounting system merchants were able to maintain records so that they could improve the efficiency of their businesses. With these records came the primitive income and balance sheet statements. 1458 Benedetto Cotrugli had writtern about double-entry book Of trading and the perfect Trader Written for 1458 but not published for more than a hundred years. 1550 First English joint stock company. The Russia Company was chartered to search for the North-east passage to Asia. 1600 East India Company founded. Company had monopoly trading rights for much of Asia. Thomas Stevens was the first accountant for the company. This successful company had much to do with the rise of England as a mercantile power. 1633-72 Rise of goldsmith-bankers in England. Goldsmiths used their safes for deposits of coins and other valuables and gradually became bankers. Beginning in 1633 goldsmith notes were used as receipts for reclaiming deposits and evidence of ability to pay. By 1660 goldsmith notes became banknotes, accepted in place of coin.

1694

Bank of England founded as a joint stock company. The Bank began to issues notes for deposit, with the promise to pay the bearer the sum (redeemable in gold or coin) of the note on demand. Initially written by hand for specific deposits, these were gradually replaced by printed fixed-denomination notes. 1704 Promissory Note Act--confirmed the legality of goldsmiths' notes as negotiable. 1709 Abraham Darby set up his iron works at Coalbrookdale. The smelting of iron with coke at the Ironbridge site was a significant step in the Industrial Revolution. This Ironbridge iron smelting site became the largest in the world and attracted many other manufacturing businesses. 1720 The South Sea Bubble Collapses. The South Sea Company was founded as a joint stock company in 1711 to trade with Spanish colonies. Speculation drove the stock price up ten fold, only to collapse on rumors of financial disaster. Investors were ruined, a recession started, and investors lost interest in joint stock companies. An audit was performed by Charles Snell, who discovered fraud by the company's directors. 1762 Barings Bank founded--Britain's oldest merchant bank. 1770-2 Josiah Wedgwood became a cost accountant. The famous potter set up his first plant in 1754. To avoid bankruptcy during a recession, Wedgwood studied his books, manufacturing cost structure, overhead, and his market structure. He became an accounting pioneer and the firm survived to the present day. 1773 London Stock Exchange. Canals, railroads and other utilities needed vast capital that could only be raised by joint stock companies. Meetings at Jonathan's Coffeehouse were used by stockbrokers for capital market transactions, which became known as the Stock Exchange Coffeehouse. The London Stock Exchange had its own building in 1802. 1831 Accounting profession gets recognized. The Bankruptcy Act of 1831 in Britain allowed accountants to be appointed "official Assignees", the first government recongition. 1844 Incorporation of business by registration. The British Companies Act of 1844 established the incorporation of business by formal registration and required the annual appointment of auditors to examine the accounts and balance sheet of all public companies. 1845 Deloitte founded, the first of the Big Eight (now five). William Deloitte opened his London firm, soon to be followed by Samuel Price and Edwin Waterhouse (1849), William Cooper (1854), and William Peat (1867). 1862 First federal income tax. With the Civil War raging, sweeping new taxes were passed including an income tax; Office of Internal Revenue established under the Treasury Department. 1882 Standard Oil invest the trust. Standard Oil used the trust to conduct the oil business across state lines. John D. Rockefeller became the richest man in America. Rockefeller was trained as a bookkeeper and became an exceptional entrepreneur. 1895 First American Big Five. Haskins & Sells founded, the first American Big Eight (now Five) firm (now part of Deloitte & Touche). 1887 Interstate Commerce Commission Act provided federal regulation of railroads, including a unifrom accounting system. Given the interstate (and global) nature of business, states had been unable to effectively regulate railraods and other businesses, requiring federal intervention

1890

First Antitrust Act. The Sherman Antitrust Act was established to eliminate preditory price fixing, monopoly pricing, and other antitrust practices. Presidents Roosevelt and Taft used antitrust laws to successfully sue major monopolies including Standard Oil early in the 20th century. 1890 Tabulating machine. Herman Hollerith invented the punch card tabulating machine to tally the 1890 U.S. Census and later founded the Tabulating Machine Co. Under Thomas Watson, Sr. this firm became International Business Machines (IBM). 1902 First billion dollar corporation. J. P. Morgan formed U.S. Steel (after buying out Carneigie Steel), the first billion dollar American corporation. Price Waterhouse appointed the first auditor of the firm. 1923 Modern cost accounting. Under Controller Donaldson Brown and Chairman Alfred Sloan, General Motors adopted or developed the major cost accounting techniques that would be used by big business for the next half century and beyond. These included return on investment, return on equity calcluations and flexible budgeting. 1929 Great Depression. The stock market crash lead to the Great Depression. The result was federal regulation and assistance to save capitalism. However, the depression didn't end until America's entry in World War II. 1936-8 Regulation of financial accounting. The Committee on Accounting Procedure (CAP) created; the term "generally accepted accounting priciples" (GAAP) used for the first time; the SEC in Accounting Series Release No. 4 delegated authority to establish accounting standards to the private sector; the CAP assumed this authority and began to issue Accounting Research Bulletins (ARBs). 1943 Income Tax withholding. Congress passed income tax withholding as the only way to collect on high tax rates to fund World War II. Tax rates would go up and down, but income taxes became the revenue generator for the expansion of the federal government. 1950 IBM Computers. IBM begins to develop electronic computers to add to their line of business equipment; the IBM 702 became available for accounting use in 1953. 1953 Computer Accounting. Arthur Andersen computerized the payroll of a General Electric plant using a UNIVAC I, starting the information age for business. The computer revolution became global and the Big Eight discovered a source of expertise primarily for consulting. 1953 First GAAP Codification. CAP issued ARB 43 which codified all previous pronouncements. The basic concepts of accounting based on historical cost concepts were developed by the CAP and many of the basic procedures of financial accounting were based on the CAP pronouncements. 1959 APB formed. The Accounting Principles Board (APB) replaced the CAP for issuing accounting standards. It suffered from many of the same weaknesses as the CAP, but issued several important opinions. Since this time the AICPA and FASB have been working together with the Securities Exchange Commission (SEC) to develop accounting standards for business. Through the help of technology and computer systems all standards created for U.S. GAAP have been centrally located into what is known as the codification. The codification reveals all of the current practices and standards, and even reveals developing areas of standards of accounting that are currently being debated

upon. Several accounting systems like Peachtree and Quickbooks have also made the accounting profession automated. These programs not only ease the reporting of transactions, but are also programmed to comply with GAAP. Because of this there is a lesser need for accountants to post transactions, and more of a need for the review of these transactions. This change is unrealized in some firms as they still employ a full accounting staff. As time moves forward it is necessary for accountants to move into a role of reviewing transactions rather than posting them.