History Of Accounting

1. Introduction to Accounting:
What’s the first thought that comes to our mind when we say the word “Accountant”? May be some mind-numbing number cruncher. Yes, to some extent it’s true but accounting is far more diverse than this. Accounting profession is mostly stereotyped, whether in a right or wrong way and people consider accountants to be soulless creatures, only focusing on numbers and processes. But most successful accountants negate this alleged interpretation and bestow their success on people skills rather than their technical knowledge. Accounting, in simplest term, is “the language of company or business” or “money management”. Accounting assist businesses to record and present their financial status and cater certain management

In the medieval times, individuals were employed by feudal barons to record and ensure the timely returns from their stewards and their tenants. The oldest accounting records to date were found in Mesopotamia containing list of expenditures and goods purchased and sold. This dates back more than 7000 years. Accounting methods continued to develop over the centuries the most important breakthrough came through Luca Piccioli in 1494. He overhauled the entire profession and formed the basis of modern accounting. He, in his book Summa de Arithmetica, Geometria, Proportioni et Proportionalita, described the double entry for bookkeeping. Obviously, businesses had been managing and keeping books of accounts but he was the first person to describe the system of Debit and Credit for recording business transaction. The basis of this system is that each business transaction has a debit and a credit effect. Even today, the accounting profession is based on this

In 1887, thirty-one accountants joined together to create the American Association of Public Accountants. The first standardized test for accountants was given a decade later, and the first CPAs were licensed in 1896. In the later part of 20th century, as the businesses expanded their geographical limits. International bodies such as Financial Accounting Standard Board (FASB) and International Federation of Accountants (IFAC) were formed, whose main purpose was to standardize the accounting profession for entire world, in the wake of recent arise of major multinational corporations and different listed entities. Their drive was to make accounting standardized so that it can be understood by most accounting users in the world.
Modern accounting profession has developed itself into critical part of modern businesses. Accountants today have the responsibility to work in the best of public interest and comply with strict ethical and technical requirements. There have been cases in the recent past where accountants have been involved in manipulating and fraudulent accounting activities, such as Enron Scandal in 2001. These scandals have put them in major public scrutiny and more regulations have been enforced to avoid such incidents in