accounting and finance
Accounting forms the very structure of society and always has. It is far more than just balancing lists of numbers, credits and debits, transactions and payments. It is the backbone of all business enterprise, the justification of growth and the means to showcase stability and success. But what exactly does accounting mean?
What is accounting?
Accounting is the process of recording, measuring and conveying information about financial developments or transactions. It sets up the basics of record keeping and is a basis to track financial accounts’ assets, liabilities, equity, revenue, expenses, and transactions. It has been around for a lot longer than you might think!
Origin and development of accounting
Accounting has been a staple of most cultures for thousands of years in one form or another. With the development of language came the development of counting, which when humans adopted the stationery agricultural model over nomadic hunting and gathering, became the concept of growth and survival. Agriculture afforded humans the ability to measure one season’s yield against another and led to the development of recording, comparison and analysis. Rudimentary Mesopotamian counters from around 7,500 BC have been found and mark the official beginning of the importance of accounting to humans.
One of the most important developments in early accounting was the invention of the bookkeeper. Bookkeepers probably emerged when the barter and trade model was still in effect, but with the growing popularity of currency and commerce the bookkeeper become even more prominent.
The ledger was the popular form of bookkeeping into the medieval period and in the fifteenth century it gained a whole new level of accounting accuracy with the inclusion of an incredibly important column. Double entry bookkeeping where credits and debits are recorded separately is still used as the basis of modern accounting, albeit with even more columns!
Accounting history timeline:
- 15,000 BC – development of language results in the development of counting.
- 7,500 BC – Mesopotamians measure goods with clay counters.
- 2,500 BC – Accounting records from Ancient Egypt, Greece and Rome show the rise in leaders’ interest in finance and the economy.
- 650 BC – the first coins were made.
- 1494 – Double entry bookkeeping is invented by Luca Pacioli, an Italian monk who prescribed a system where private property, capital, large-scale commerce, credit, transactions and arithmetic needed to be described in order to see the possibilities of finance in the feudal world.
- 1543 - Hugh Oldcastle’s work, A Profitable Treatyce called the Instrument or Boke to learn to know the good order of the keepying of the famouse reconynge called in Latyn, Dare and Habdare, and in English, Debitor and Creditor is printed in London.
- 1683 – Scotland prints its first book on accountancy in Edinburgh called: The first Scottish book on accountancy entitled Idea Rationaria, or the perfect accomptant, necessary for all merchants and trafficquers: containing the true forme of book-keeping, according to the Italian methode, by Robert Colinson.
- 1760 – The industrial revolution and technology boom allows businesses to fully grasp the opportunities of global markets and they start to invest in teams of accountants.
- 1805 – Schools in Sidney begin to offer children tuition in reading, writing, arithmetic and bookkeeping “according to the Italian mode” (double entry bookkeeping).
- 1831 – The first public recognition of accountants as properly skilled agents occurs when the Bankruptcy Act is passed.
- 1880 – On the 11th May 1880, Queen Victoria signs The Royal Charter Order in Council, confirming The Institute of Chartered Accountants of England and Wales (ICAEW) as a new professional body.
- 1886 – The Chartered Accountants Benevolent Association is established; this allows successful accountants to offer charitable efforts and alms.
- 1888 - The Financial Times commences publication.
- 1904 - The Association of Chartered Certified Accountants (ACCA) is established.
- 1909 - London Association of Accountants admits Ethel Ayres Purdie, the first female accountant.
- 1915 – The first woman is appointed to a professional accounting body anywhere in the Commonwealth, when the Institute of Accountants and Auditors of Western Australia, a precursor of CPA Australia, admitted Mary Addison Hamilton as a member.
- 1919 - The Chartered Institute of Management Accountants (CIMA) is founded on 18th April.
- 1920 – The ICAEW admitted their first female member, Mary Harris Smith in May 1920.
- 1924 – Ethel Watts becomes the first woman to qualify for membership to the ICAEW due to her exceptional examination results, and their second female member.
- 1990 - The Financial Reporting Council is established.
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