history of bookkeeping and accounting the ancient world medieval developments industrial revolution...
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History of Bookkeeping and Accounting
The Ancient WorldMedieval DevelopmentsIndustrial Revolution
Scribe - Sakkara about 2500 BC (Louvre)
The “Near East” – Cradle of Civilization
Ancient Names Sumeria Assyria Mesopotamia Babylon Persia
Dawn of Civilization
Transition from hunter/gather to farmer
Jordan River Valley Jericho – Oldest
fortified city discovered so far Artifacts date back
some 10,000 years!
“Jerry of Jericho”The First Inventory
Who was the first accountant? Someone who
needed to keep track of what was stored in temple or king’s granary?
Must “writing” come before record keeping?
Scribe - Sakkara about 2500 BC (Louvre)
Which came first – writing or numbers?
Dr. Gunter Dreyer of the German Institute of Archaeology is perhaps the most prominent of a number of archeologists who believe that writing actually developed out of early marks that were used to tally the kinds and amounts of goods in stock at ancient warehouses
Earliest writing = inventory control!
Dr. Dreyer recently discovered numerous inscribed bone labels attached to bags of oil and linen in the tomb of King Scorpion I at Abydos, Egypt.
The labels date back 5300 years, are the world's earliest known writing, and describe inventory owners, amounts, and suppliers.
One of the Oldest Professions!
In ancient Egypt, the accountant was called the "eyes and ears" of the king.
Simple Token System
Simple token system did not require abstract concepts of numbers, writing or money!
Token system expanded – used as evidence of transactions Clay “envelopes”
date from around 4000 BC in Sumeria
Envelope & tokens - Susa, 3300 BC (Lourve)
Accounting pre-dates writing!
Complex tokens evolved about 3700 BC Use of lines, notches and other
markings used as abstract representations of wealth and the development of numbers
Evolved into cuneiform
Accounting records on pre-cuneiform tablet (Louvre)
Cuneiform Collection – SMM 7
Translation: 1. 3 acres barley, for harvest,2. Field of the Ash Trees3. Dada, the swineherd4. Seal(Ed by) Lugal-ema e5. Month of barley harvest,6. year Huhnuri was destroyed.
This tablet is a receipt for beer, sealed by a clerk named Umani.
Sealing Tablets
Source: - Science Museum of Minnesotahttp://www.smm.org/research/Anthropology/cuneiform/sealing.php
Babylonia – Base 60 numerals
Here are the 59 symbols built from just two symbols
Ancient Egyptian Numbers
“Zero” had not yet been “invented
Sticks & Strings
Other accounting systems for illiterate ages and societies
The Inca Quipu
The Inca (unlike the Maya and Aztec) had no true form of writing
Tally Sticks
These sticks recorded expenses for illiterate servants and masters. As money or goods changed hands, the tally sticks were carved with v-shaped grooves for "pounds," rounded grooves for "shillings," and slices for "pense."
At the end of a transaction, the stick would be split lengthwise and divided between the debtor and the creditor until the debt was paid.
Invention of Money
http://www.med.unc.edu/~nupam/ancient1.html
First coin of India (?) Before 5th Century BC Minted in Madhyadesha?, found near MathuraSilver unit Seven punch marks Weight: 7.14 gmNumismatic Digest # 22 Rare
Coins appear to be a simultaneous but independent development at about the same time in China, India, and Greece
Invention of Coins – around 630BC
Castulo AE30. Augustus' (?) portrait right / Helmeted Sphinx right, star before, Iberian legend in ex. - photos from http://www.wildwinds.com/coins/sg/sg0015.html
Ancient Greece
The public economy of the Athenians had a highly developed system of accounting & auditing Treasurer or manager of Public
Revenue Accounts kept by clerks and
controlled by “checking clerks” Accountability assured by public
exposure of accounts on stone
Ancient Rome
Practices of private life led to public accounting process Transactions were first entered in a “day
book” (memorandum or “adversaria” in Latin)
Monthly, the entries were transferred to the ledger (“codex tabulae”)
The codex could be used in court to substantiate contracts and claims
In government – separation of responsibilities
China
Accounting largely used to evaluate efficiency of governmental programs and civil servants
To date, no evidence of double-entry bookkeeping before introduction from west in 1800s
The Rise of Double Entry
Crusades – demand for exotic goodsGenoa-Venice-Florence: A Commercial Revolution
Littleton’s Antecedents of Bookkeeping
1. Private property (power to change ownership)
2. Capital (wealth productively employed)
3. Commerce(exchange of goods)
4. Credit(present use of future goods)
5. Writing 6. Money 7. Arithmetic
The antecedents then require:
A methodology (a plan to systematically rendering the material into the language)
The Father of Accounting: Fra Luca Pacioli
He was born in 1445 in Sansepolcro, Italy.
A dedicated Franciscan, he showed a passion for mathematics
Did not invent double entry – but wrote the most influential early “textbook”
Traditional
1494 – The Summa
The treatise’s official title: "Summma de Arithmetica, Geometria: Proportioni et Proportionalita"
One section of the book was devoted to methods of recording merchant transactions, including ideas about double-entry bookkeeping.
Numbers in Medieval Bookkeeping
Even though the Italian merchants calculated with Arabic numerals as early as the 13th century, Roman figures dominated in their account books until the late 15th century (but with decreasing frequency). Use of Roman numerals persisted in northern
Europe even longer as double entry moved north gradually
The prolonged use of the ’old’ writing style is mostly explained by with the general belief of the contemporaries that the Roman were forgery-proof.
Sombart’s Theory (1924)
Double entry bookkeeping was such a powerful tool that it made possible the new social and economic system which we call capitalism
“chicken and egg” arguments!
Rise of Cost Accounting
Josiah Wedgwood – Entrepreneur & Cost Accountant 1770-2 financially difficult times with
dropping demand and rising inventories Found head clerk had been embezzling Began looking at costs of materials and
labor & allocated overhead costs Discovered economies of scale –
importance of volume Started differential pricing – elite vs.
mass-market New manufacturing equipment introduced
The Abacus
The Abacus is an ingenious counting device based on the relative positions of two sets of beads moving on parallel strings. The first set contains five beads on each string and allows counting from 1 to 5, while the second set has only two beads per string representing the numbers 5 and 10. The Abacus system seems to be based on a radix of five. Using a radix of five makes sense since humans started counting objects on their fingers.
http://www.xnumber.com/xnumber/mechanical1.htm00
The Exchequer
in British history, the government department that was responsible for receiving and dispersing the public revenue. The word derives from the Latin scaccarium, “chessboard,” in reference to the checkered cloth on which the reckoning of revenues took place.
Technology Changes What’s Possible in Accounting
William Seward Burroughs invented and patented the first workable adding machine in 1885 in St. Louis, Mo. Production increased
dramatically after 1900