History of Accounting and Its Development

History of Accounting and Its Development
1. 1 Early history of accounting
Various experiments have been carried out to state the location and time of birth of a paired recording system that has produced various scenarios. Most of these scenarios acknowledge the existence of a form of record keeping in most cultures since around 3,000 BC.

C. Littleton listed seven prerequisites for the emergence of systematic bookkeeping:
The Art of Writing, because bookkeeping is essentially a note; Arithmetic (Arithmetic), because the mechanical aspects of bookkeeping contain the existence of a series of simple calculations; Private Property, because bookkeeping is only concerned with the recording of facts about property and ownership rights; Money (Money) is a transaction that has not been completed, because there will be no incentive to make any notes if all exchanges are made on the spot at the same time; Commerce (Commerce), because a local sale alone will not create enough pressure (business volume) to stimulate people to coordinate various thoughts into a system; Capital (Capital), because without trading capital will not mean and giving credit becomes something that is impossible to imagine.
Each of the ancient cultures mentioned above has included these prerequisites, as well as explaining why there has been some sort of bookkeeping in it. If we want to trace this important knowledge (accounting) back to its origin, we will naturally assume the first meeting will be from the first traders; and no one is worthy of claiming that at that time other than the Arabs. The Egyptians, who for some time showed their glory in the world of commerce,
get the thought of carrying out such trade through its interactions with the nation; and, as a consequence, it was from them that the Egyptians had to do a first form of accounting, which, according to common trade methods, was communicated to all the cities in the Middle East. The business of trade, which for every trading city in Europe is connected by the Lombards, also introduces their method of account recording, through the use of paired records; now known as Italian bookkeeping.
This Italian bookkeeping developed, along with the development of trade from the Italian republic and the use of the method of bookkeeping in pairs in the 14th century. The first known pairing book is the bookkeeping of Massari from Genoa, which dates back to 1340.

1. 2 Luca Pacioli's Contributions
The name Luca Pacioli, a priest of the Franciscan order, is generally associated with the introduction of bookkeeping in pairs for the first time. In 1494 he published his book, Summa de Arithmetica Geometria, Proportioni et Proportionalita, in which there are two chapters - de Computis et Scripturis - describing bookkeeping in pairs. He stated that the purpose of bookkeeping was "to provide traders with non-delayed information about the state of their assets and debts". Debit (adebeo) and credit (credito) are used in recording to ensure a paired record. He said, "All records must be in pairs.
That is, if you make a creditor, then you must make a debtor ". Three books are used here: a memorandum, a journal, and a large book. At the same time, given the short life span of business firms, Pacioli suggested the calculation of a period's earnings and book closing. Below are the suggestions given:
It is a good thing to close the book every year, especially if you have a partnership with other parties. Frequent accounting records will extend friendships.

1. 3 Bookkeeping progress in pairs
These developments include the following:
Around the 16th century there were some changes in bookkeeping techniques. A noteworthy change is the introduction of special journals for recording different types of transactions.
In the 16th and 17th centuries there was an evolution in the practice of periodic financial statements. In addition, in the 17th and 18th centuries there was an evolution in the personification of all accounts and transactions, as an attempt to rationalize the debit and credit rules used in accounts that are uncertain in relation and abstract.
The application of a paired recording system is also extended to other types of organizations.
The 17th century also recorded the use of separate inventory accounts for different types of goods.
Starting with the East India Company in the 17th century and then followed by the development of the company, along with the industrial revolution, accounting gained a better status, which was indicated by the need for cost accounting, and the trust given to the concepts of sustainability , periodicity and accruals.
Methods for recording fixed assets evolved in the 18th century.
Until the beginning of the 19th century, depreciation for fixed assets only counted on unsold merchandise.