Called the language of business

The process of identifying, measuring and

communicating economic information to
permit informed judgments and decisions by
users of the information
The art of recording, classifying and
summarizing in a significant manner and in
terms with money, transactions and events
which are, in part at least, of a financial
character, and interpreting the results thereof
PRIMITIVE
8500 B.C.
the origin of keeping accounts has been
traced.
Archaeologists have found clay tokens-cones,
disks, spheres, and pellets in Mesopotamia
(modern Iraq)
The token represented commodities as
sheep, jugs of oil, bread or clothing and were
used in the Middle East to keep record.
 Tokens were often sealed in clay balls called
bullae, which were broken on delivery so the
shipment could be checked against the
invoice, in effect, were the first bills of lading.
Wet clay tablets replaced clay tokens
 Ancient Civilazations of China, Babylonia,
Greece and Egypt
1st Dynasty of Babylonia (2286-2242 B.C.) its
law was based on the Code of Hammurabi,
requires merchants trading goods to give
buyers a sealed memorandum containing the
agreed price before it can be considered
enforceable.
Scribe (the predecessor of modern
accountant) records the agreed transaction
on a small mound of clay with parties affixing
their signatures on it.
 3600 B.C.
Clay Tablets also recorded payments of wages.

MIDDLE AGES
11th to 13th centuries
As a result of the crusades, Northern Italys
literacy become widespread.
Arabic numerals were also being used as a result
of trade with the Near East allowing columns of
numbers to be added and subtracted.
The use of credit was prevalent and a semblance
of an international banking system was also
functioning.
 11th to 14th centuries
Throughout the West Coast of South America
spanned the Inca Empire.
Used knotted cords of different lengths and
colors called quipu to keep accounting
records.
13th to 15th century
Development of more formal account-
keeping methods is attributed to the
merchants and bankers of Florence, Venice
and Genoa
 Double-entry bookkeeping is not a discovery
of science; it is the outcome of continued
efforts to meet the changing necessities of
trade.

German Philosopher Oswald Spengler wrote

in The Decline of the West (1928) that the
invention of double-entry bookkeeping was
the decisive event in the European economic
history.
 The Florentine Approach
1211
The earliest evidence of business bookkeeping in
Florence, France was evidenced by the bank
ledger fragments
13th century
Development of accounting in Tuscany, Italy as
evidenced in the account-books or extracts.
The emergence of double entry itself, was first
witnessed in the ledgers of Renieri (or Rinieri)
Fini & Brothers (1296-1305) and Giovanni Farolfi
& Company (1299-1300)
 Giovanni Farolfi & Company was a firm of
Florentine merchants whose head office was
at Nimes in Languedoc, in the kingdom of
France.

Amatino Manucci was the inventor of double

entry bookkeeping.
He used five booksgeneral ledger, two
merchandise ledgers, expenses ledger, and
cash book (with the white ledger as a sixth)
 The Method of Venice
Luca Pacioli
a Franciscan friar and a celebrated
mathematician, made no claim to developing
the art of bookkeeping.
Has been regarded as the father of double-
entry accounting.
Stated that the purpose of bookkeeping was
to give the trader without delay information
as to his assets and liabilities.
 Goethe
Famous German Poet and Dramatist, referred
to double-entry bookkeeping as one of the
finest discoveries of human intellect.
Werner Sombart
An eminent economist-sociologist, believed
that double-entry bookkeeping is born of
the same spirit as the system of Galileo and
Newton.
 Savary and Napoleonic Commercial Code
1673
The earliest systematized form of accounting
regulation developed in continental Europe,
starting in France.
The government introduced the submission
of annual fair value statement of financial
position to protect the economy from
bankruptcies.
 The legal requirement for businesses to keep
accounting record was first introduced in the
Ordonnance de Commerce, which was put
through by Jean-Baptiste Colbert during the
reign of Louis XIV, and the Napoleonic
Commercial Code of 1807, that influenced
the bookkeeping provisions of commercial
law throughout Continental Europe,
Francophone Africa, and beyond.
 17th century
Nicolas Petri was the first person to group
similar transaction in a separate record and
enter the monthly totals in the journal, rather
than recording all transactions sequentially
Benjamin Workman published The American
Accountant, the earliest-known American
accounting textbook.
 Industrial Revolution, Corporate
Organization, Railroads, United States Steel
late18th century
Formation of an accounting profession was
closely tied to the rise of a modern industrial
society in Britain
Early 19th century
a outbreak of textbooks and handbooks on
accounting had appeared, reflecting the
impact of the Industrial Revolution
 Mid-18th to mid-19th England
Changed the method of producing
commercial goods from handicraft method to
the factory system.
 Information Age
Dan Brinklin and Bob Frankston wrote
VisiCalc for the Apple II, the first electronic
spreadsheet.
 Modern bookkeeping systems are still based
on principles established in the 15th century.
Why has a recording system devised in
medieval times lasted for so long? There two
main reasons:
1. It provides an accurate record of what has
happened to a business over a specified
period of time; and
2. Information extracted from the system can
help the owner or the manager operate the
business much more effectively.
 In essence, the system provides the answers
to three basic questions which owners want
to know:
1. What profit has the business made?
2. How much does the business owe?
3. How much is owed to it?
 As a result, Paciolis system had to be
adapted for modern business practice so that
it can satisfy the demand for information
from two main sources:
1. From owners, who want to know from time
to time how the business is doing; and
2. From the managers, who need information
in order to help plan and control it.
 Owners and managers do not necessarily
require the same information and so based
on this accounting has developed into two
main specializations:
1. Financial Accounting which is concerned
with the supply of information to the
owners of an entity; and
2. Management Accounting which is
concerned with the supply of information to
the managers of an entity.