Evolution Of Accounting
Through the historical method, the primitive inconsistent and confusing system of keeping accounts has reached a disciplined system of accounting. Accounting goes forward keeping pace with the technological advancement of the dynamic social structure. On the idea of the information received from the history of evolution and the options of gradual development, the history of Accounting will chronologically be classified into four stages
Emergent stage (from a primitive age to 1494 AD),
Preanalytic stage (1495 – 1799),
Development i.e. analytic stage (1800-1950),
Modern age (1951- onward)
The history of the gradual development of Accounting through these four stages is mentioned below
01). Emergent stage (from a primitive age to 1494 AD)
This stage covers the amount from the start of human civilization to 1494. Any reliable supply concerning the precise beginning of accounting observe is however to be determined. But it will roughly be aforesaid that Accounting observe started once the exchange of products or services, was felt necessary. But the method of accounting of that point wasn’t the least bit developed and disciplined as of nowadays. The aborning stage of Accounting emerged keeping pace with the subsequent written record stages of the history of human civilization.
(a) Stone stage,(b) Primitive stage,(c) Barter stage, and(d) Currency stage.
The gradual evolution of accounting through these four stages is mentioned below in short
(a). Stone stage
When the man failed to know how to make a house, they went to sleep in caves, mountains, and jungles and attained their resource by collecting fruits and hunting animals. They unbroken accounts of their collected fruits, hunted animals, and lent merchandise to others by marking ticks on the trees, on the walls of the caves of mountains and stones, or creating holes or symbols as per their need. In this method, the accounting thought emerged
(b). Primitive stage
This stage started simply with the start of the social life of human beings. people of this stage, unbroken their accounting marking ticks on the walls and creating rope-knots
(c). Barter stage
With the introduction of the barter system to satisfy the need of kith and kin the system of accounting additionally developed. According to professor Littleton, from the sensation of the need of keeping systematic records in terms of cash of non-public exaggerated properties arising out of agriculture the accounting emerged.
(d). Currency stage
Through the evolutionary process at one stage the employment of cash started. At this stage agriculture, business, and trade and commerce flourished. According to Glautior and below down, within the age of the social organization, a higher-up method of accounting was in follow.
The feudalistic lords assigned the responsibilities of superintendence of their entire properties to a bunch of salaried staff. This staff was alleviated by their assigned responsibilities when they might submit the statement of financial gain and expenditure and properties. Possibly the thought of debit and credit came into being from that point.
With the passage of your time, the volume of business and quantity of transactions enhanced and therefore the system of keeping accounts of each transaction beneath separate classified heads was introduced. In fact, once and wherever the double-entry bookkeeping system was introduced is nonetheless to be discovered. But most of the people feel that the double-entry bookkeeping system was introduced centering Rome – once the middle of civilization and trade and commerce, that was set as a link between Asia and Europe in the thought of geographical benefits. In the middle age economic development helped the event of Accounting to an excellent extent. According to Kenneth Most, Luca Pacioli is taken into account the father of Accounting as a result of his illustrious book ‘Method of Venice’ had been a model of a textbook for long 200 years. He additionally explained the most principles and strategies of the bookkeeping system in his initial book “Summa de Arithmetica Geometria, Proportionate Proportionality”.This book is split into 5 chapters.
Arithmetic and Algebra,
The application of Arithmetic and Algebra in trade and commerce,
Accounting,
Money and Barter System, and
Theoretical and Applied Geometry.
He was indeed the primary man who explained the double-entry bookkeeping system thoroughly in written form however he cannot claim to be the mastermind of this technique as a result of the available proof proves that this technique was in a very apply in a very haphazard means at the start of the fourteenth century. Yet, Pacioli is regarded as the father of Accounting as he had explained this technique lucidly and consistently in his book that was the first written book on Accounting.
02). Pre-analytic Stage (1495-1799)
The third chapter of the renowned book of Loca Pacioli i.e. accounting was reprinted in 1504 whereby he clearly mentioned and explained the foundations of determinative debit and credit and preparation of journal, ledger, and trial balance. Subsequently, this book was translated and printed in Scottish, German, French, Russian, and English. The Accounting chapter is termed as – “Particulars de Computes at Scriphris” i.e. a comprehensive description relating to accounts recording. This chapter is principally divided into 2 halves’; the first part concerning inventory and therefore the ordinal one concerning disposition. This book contains elaborated discussion concerning rules for journalizing the business transactions with complete narration, transferring nominal accounts to profit and loss account giving the impact of them to capital account. Accounting primarily depends on economic and social development. In fact, throughout this era, little modification happened during this world and therefore the same is true just in the case of economic development. Naturally, no outstanding progress was marked within the concept and application of Accounting. The changes and development that took place in accounting methodology and thought throughout the 300 years period are mentioned below briefly.
Enrichment of dual aspect concept of double entry system
During this era all heads of accounts regardless of person, establishment, and materials are thought of as a private account and also the idea that the receiver profits may be a debtor and also the giver of benefit may be a creditor was established.
Introduction of the periodic concept
Due to the introduction of the going concern concept, it is presumed that business concerns will continue for an indefinite period. But the investor cannot wait for an indefinite period. So, the necessity of preparing periodic statements of accounts was felt. As a result, the concept of periodic accounting was introduced.
Introduction of money measurement concept
Accounting becomes significantly logical if cash is taken into account the media of activity. The names of assets and liabilities aren’t in the slightest degree enough to precise the financial position of a priority until and unless these are expressed in terms of cash. That is why the money measurement concept was introduced
Publication of explanatory books on the accounting method
Some distinguished professors of European countries enriched accounting conception to an excellent extent by writing books once Luca Pacioli. Among them, Simon Stevin and Arthur Cayley-professors of the arithmetic of Cambridge University are famous for their book – “The Principles of double-entry Book Keeping.”
Publication of Critical Articles
During this era, some mentionable important articles strengthened the bottom of Accounting. It is best-known from Edward Peargallo’s writings that several thinkers of that point were interested in writing about the accounting system that was employed by business considerations. The scope of Accounting enlarged to a good extent with the publication of important articles and therefore the analysis work thereon. This analysis work was thought-about the birthplace of accounting development
03). Development or Explanatory Period (1800 – 1950)
About one hundred and fifty years starting from 1800 to 1950 is thought to be Development or explanatory amount. As a result of the industrial revolution and the appearance of the Joint Stock company, large-scale production, multi-scale production, and wider competition, the need to earn a maximum profit and government management created new issues and numerous complexities within the field of the accounting system. The necessity of an accounting analysis method was felt to seek out the solutions to those issues and complexities. These research and analysis processes have competed for a significant role to assist Accounting in an additional step of advancement. During time several writers of various European countries developed basic theories that created accounting system of the then period substantially logical.F. S. Hendriksen classified the events- of the period from 1800-1930 into seven classes that influenced the establishment and development of the accounting system
e.g.
Textbook publication on Accounting and development of newer methods of teaching accounting,
Impact of the industrial revolution,
Influence of railroad invention and growth,
Government regulation of business,
Taxation on business,
Formation of the joint-stock company and large corporation, and
Influence of economic theory.
04). Modern period
The period of the gradual development of the accounting system after 1950 up to now has been termed as the modern period. After the 2nd world war production system was modified to an excellent extent thanks to the exceptional advancement of science and technology. Immense advancement was created in industry and commerce and these influenced the economic and social life hugely. Traditional accounting systems might solely provide data to the owners and administrators for taking decisions for regular activities. Under the modified circumstances this ancient system of accounting failed to meet the demands of various interested parties of the society. Various classes of people of the society got interested parties of business organizations directly or indirectly with the change of nature, size, and range of business issues. For this reason, attempts was created to update the accounting system criticizing
References
- Investopedia – Accounting
- Accounting Tools
- Google Scholar – Evolution of Accounting
- AccountingWeb
- SciELO – The Evolution of Accounting Theory and Practice: the Future Aspects
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