The entire world and its economy would not function the way it does currently if not for the concept of accounting. Somewhere along the way, this concept had to have been invented. But when and by who? In this article, DSJ will dig into the accounting concept and its roots.
Accounting at the Fertile Crescent
Alongside the earliest forms of writing and counting, experts believe the origin of accounting was directly part of this crucial period. Mesopotamia was one of the first civilizations that realized the results of labor and someone’s effort put into that labor is measurable. Other ancient civilizations such as Egypt and Babylon used a system similar to the debit and credit method to account for the population in certain villages.
Commodity in Italy
The man who is known to be the “Father of Modern Accounting” is Italian man Luca Pacioli, who explained the concept of double-entry bookkeeping in 1494. The system was used by ship merchants and they were reported as the first group to use the credit and debit system in journals and ledgers. This is the method that is still taught and used today.
Industrial Revolution
Around the same time, the entire world was being swept off its feet due to the industrial revolution, and there was a large need for companies to have advanced accounting systems. As businesses continued to grow, so did the number of business investors. The debit and credit system was used largely to adapt to these changes.
In the 1840s-1850’s, the industrial revolution in Europe and the United States was in full effect. Nations such as Britain had cities that were beginning to become worldwide financial capitals. The number of Limited Liability Companies that were being founded was at extremely high number. This ultimately created a huge demand for technically competent accountants, that business owners could trust with their personal and business transactions.
Accountants Recognized as Professionals
For quite a long time, accountants were considered to be nothing more than a solicitor. This is because a lot of legal companies would try to solicit accounting services in addition to their legal services. Eventually in Scotland, a group known as the Institute of Accountants in Glasgow petitioned the queen, asking her for a royal charter. They did this to distinguish themselves from solicitors and to also be recognized as professionals once and for all. According to Historians, 49 Scottish Accountants signed this petition, highlighting that the accounting profession has been around for decades and is continuing to grow rapidly, as more people continued to get into the accounting profession.
The Profession of Today
Today, Accountants are known to be some of the most trusted and reliable professionals, with extremely high work ethics. As government regulations on corporations and other businesses continue to expand, having a trusted accountant that can add their expertise to any situation that may arise is more important than ever.