HISTORICAL
EVOLUTION OF ACCOUNTING
Links to Accounting
History:
History
of
Accounting
- 4500-3600 BC: Record-keeping by
early
Babylonia
and Assyria--Also by the Greeks & Romans.
- 1340: First record of a complete
system
of double
entry bookkeeping traced to the City of Genoa, Italy.
- 11th to 13th Century: --
Religious
crusades--provided
the impetus for increased trade and commerce, both among Italian cities
and with the East.
Expanded trade created wealth.
Partnership developed--permitted sharing
of risks; permitted the combining of labor and capital.
Silent partnership--
Partnership helped shape the separate
entity concept.
Prior to the 16th Century:
Characteristics of accounting:
- objective of accounting was to
provide
information
for the owners.
- no distinction between business and
the
owners
- no accounting period concept
- no concept of
continuity of business operations
- Lack of a common monetary
unit--resulted
in
description in the records
close of the 15th Century: The
Italian
cities began to decline politically and as the centers of trade.
Trading
centers spread to Spain and Portugal and then to Antwerp and the
Netherlands.
Italian system spread also.
- 17th Century: Profit and
loss
(income)
began to be balanced at the end of each year rather than at the end of
each venture. Reflected the fact that many more businesses were
organized
with the purpose of establishing a continuity of manufacturing and
trading
over long periods of time.
- 17th and 18th
Centuries
"Personification of accounts" -- Practice of treating accounts as if
they
were independent, living entities (Hendriksen believes that it is
possible
that personification hindered the development of accounting theory by
the
substitution of rationalization and detailed rules for logical
explanation)
1776
--
Adam
Smith
published
Wealth of Nations. Affected
thinking
on
trade
barriers--led to relaxation of trade barriers.
Industrial Revolution--1790 -1810
Beginning of the Industrial
Revolution
Brief
overview of the Industrial Revolution
Cottage
system of production
Direct Effects
1. Development of the concept of
depreciation
2. Development of cost
accounting
Indirect effects
1. distinction between capital
and
income
2. Development of the going
concern concept
3. Greater adherence to cost as a basis
of
asset valuation
Shift in emphasis from the Balance Sheet
to the Income Statement( balance
sheet theory of profit )
Influence of
Railroad Growth
Influence of Income
Taxation
Influence of the Corporation
Influence of Governmental
Regulation
review
questions
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to contemporary accounting issues