Accounting: Origin / History:

Accounting:   

Origin / History:

Actual origin of accounting cannot be exactly dated; it is as old as civilization. In ancient books of Egypt, Babylonia, Greek, Rome, India, China there are ample examples of accounting in some crude form.

Historical evidence reveal that Egyptians used some form of accounting for their treasuries where gold and other valuables were kept. The incharge of treasuries had to send day wise reports to their superiors known as ‘Wazirs’ (the Prime Minister) and from there month wise reports were sent to kings. Babylonia, known as the city of commerce, used accounting for business. In Greece, accounting was used for government financial transactions. Romans used memorandum or daybook where receipts and payments were recorded and posted to ledger in monthly basis. (700 B.C. to 400 A.D.) China used sophisticated form of government accounting as early as 2000 B.C.

Accounting practices in India could be traced to a period when 23 (twenty three) centuries ago, when ‘Kautiliya’ (a minister of Chandragupta’s kingdom)  wrote a book named ‘Arthashastra’, which described the way of maintaining  accounting records.  He devoted a chapter on ‘Accounting & Auditing’ in his book.

In 1340 “Double Entry System” was first propounded in Geneva, in Italy. But it was developed in a proper form in Venice by Fra Luca Paci-oli a Franciscan friar (merchant class) of Italy in 1494. His book “Summa De Arithmetica, Geometria, Proportion at Proportionality” is considered as the first book on Double Entry System. In his book, he used the present day popular terms of accounting ‘Debit (Dr.)’ and ‘Credit (Cr.)’.

Today’s accounting is much more than just book-keeping and preparation of financial reports. Accountants are now capable of working in exciting new growth areas such as: Forensic Accounting (solving crimes such as computer hacking and the theft of large amounts of money on the internet), E-commerce (designing web-based payment system), Financial Planning, Environmental Accounting etc.

Now a day, accounting become an information system, it collects a data and communicates economic information about the organization to a wide variety of users whose decisions and actions are related to its performance.

Meaning of Accounting:

In 1941, the American Institute of certified public Accountants (AICP) had defined accounting as, “ Accounting is the art of recording, classify and summarizing in a significant manner and in terms of money, transactions and events, which are in part atleast, of a financial character, and interpreting the results thereof.” [as a recording process]

            In 1966, the American Accounting Association (AAA) defined accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of information.” [as a information system]

            In 1970, the Accounting Principles Board of AICPA also emphasized that the function of accounting is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions. [as a information system]

            Accounting can therefore be defined as the process of identifying, measuring, recording and communicating the required information relating to the economic events of an organization to the interested users of such information.

            Following are the relevant aspects of accounting definition:

·                     Economic Events,

·                     Identification, Measurement, Recording and Communication,

·                     Organization,

·                     Interested Users of Information.