General accounting
History of accounting
Video
Accounting is exactly as old as History for a very simple reason:
- Herodotus defined the beginning of History as the beginning of writing
- the first writings were accounting records
Let's consider a long historical perspective:
In the millenniums before -8000, the Earth warmed up. It is was the end of the last ice age. In parts of the Middle East and several other areas of the world, human beings changed their way of life. Instead of being wanderers hunting and gathering their food, they settled down, founded villages, and began to produce their food: growing crops and raising cattle.
This is also the beginning of a more sophisticated social organisation, of more elaborate exchanges, of codes, etc.
source: http://www.hyperhistory.com
Some proto-writings have been identified in the millenniums between -8000 and -3000. It is around -3200 b.c., however, that the firt writings properly speaking, that is signs that could be read in a unique way to tell something, appeared. This took place in an area of the Middle East that was called Sumer (roughly speaking, modern Koweit).
These writings were used to record contracts between people who had exchanged some things. They also served to note legal codes (Hammurabi code, -1750), and epics (Epic of Gilgamesh, late third millennium and second millennium).
From -3200 b.c. until the XIIth century a.d., accounting techniques were rudimentary. They essentially consisted in recording how much money we had.
There are indeed two types of accounting:
- single-entry accounting
- from -3200 to the XIIth century
- it is also called cash accounting
- it is the one we still use in our personal checkbook booklet
- double-entry accounting
- invented by Italian merchants in the XIIth and XIIIth centuries
- more sophisticated than single-entry accounting
- we shall see that it is a value accounting
- it records transactions, with a debit in some account and a credit in some other account
We shall learn all this. Double-entry accounting is also called nowadays simply: general accounting. It is the subject of this course.
Landmarks in double-entry accounting:
- XIIth century: emergence of the techniques of double-entry accounting in Northern Italy
- 1494: first "textbook" by Luca Pacioli
- 1543: book of Jan Ympyn. He is the author who popularised double-entry accounting all over Europe
- 1682: book of Bertrand-François Barrême (which was used for a couple of centuries in France, and gave the word "barème": abacus, table, scale)