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Evolution of Accounting

Evolution of Accounting

Evolution of Accounting Developments in accounting practice, principles and procedures have to keep pace with the changes in economic, social, legal, political and other environments prevalent in a country.

Accounting has appeared since the beginning of civilization.l introduction of money, as a medium of exchange, provided the necessary impetus for the development of modern accounting. with the advent of the industrial age in the nineteenth century and later the emergence of large corporations, a new concept named Separation of Ownership has been emerged i.e the owners are separated from managers of business. As a result the need to report the financial status of the enterprise became more important to ensure that managers acted in accord with owners wishes. That is, managers are accountable to the owners for reporting to them. As a result our economy has now evolved into a post-industrial age the information age- which many products are information services. The computer has been the driver of the information age for Evolution of Accounting .

Traditionally the term Accounting stands for record keeping. The origins of modern accounting are generally attributed to the work of the father of scientific recording system, Luca pacioli, an Italian mathematician. In his text named “summa de Arithmetica, Geometria, Proportione et propirtionalite, during 1494 Pacioli described a unified system to ensure that financial information was recorded efficiently and accurately.

The development of accounting is as old as the history of civilization. The gradually development of business plays a significant role in the emergence of today’s modern accounting. The evolution of accounting can be shown sequentially as follows:

Reciprocity of needs

Development of barter system

Enhancement of trade and commerce (mainly overseas business)

Development of double entry system (Mile stone of accounting) by Luca Pacioli

Industrial revelation

Development of factory system/ large production

Separation of ownership from management

Development of auditing

Government control

Management Revolution (cost management)

Development of different accounting concepts & principles

Development of giant multinational company (MNC) and transnational company (TNC)

Development of GAAP & IAS (International Accounting Standards)

Emergence of different branches of accounting (Human resource accounting, environment accounting, social responsibility accounting and so no)

Stiff competition

Development of different techniques (just-in-time management, Total Quality Management, Different costing techniques etc.)

Automation (Particularly computer technology)

Globalization

E-commerce (which reduces the paper work for the accountants. Accounting is gradually vested with the responsibility of decision making in global business)

Evolution of Accounting

 

 

 

 

 

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