History of Bookkeeping and

Accounting
Scribe - Sakkara about 2500 BC (Louvre)

The Ancient World

Medieval Developments
Industrial Revolution
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
Scribe - Sakkara about 2500 BC (Louvre)

 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?
 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!

 Inancient Egypt, the accountant

was called the "eyes and ears" of
the king.
 Simple Token System
 Simple token  Token system
system did not expanded – used
require abstract as evidence of
concepts of transactions
numbers, writing  Clay “envelopes”
or money! 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 Trees
3. Dada, the swineherd
4. Seal(Ed by) Lugal-ema e
5. Month of barley harvest,
6. year Huhnuri was destroyed.
 Sealing Tablets

This tablet is a
receipt for beer,
sealed by a clerk
named Umani.

Source: - Science Museum of Minnesota

http://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
Coins appear to be a simultaneous but
independent development at about the
same time in China, India, and Greece

First coin of India (?)

Before 5th Century BC
Minted in Madhyadesha?, found near Mathura
Silver unit Seven punch marks
Weight: 7.14 gm
Numismatic Digest # 22
Rare

http://www.med.unc.edu/~nupam/ancient1.html
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 goods

Genoa-Venice-Florence: A
Commercial Revolution
 Littleton’s Antecedents of Bookkeeping

1. Private property 5. Writing

(power to change 6. Money
ownership)
7. Arithmetic
2. Capital
(wealth productively
employed)  The antecedents then
3. Commerce require:
(exchange of goods)  A methodology (a plan to
systematically rendering the
4. Credit
material into the language)
(present use of future
goods)
The Father of Accounting:
Fra Luca Pacioli

 He was born in 1445

Traditional
in Sansepolcro, Italy.
 A dedicated
Franciscan, he
showed a passion for
mathematics
 Did not invent double
entry – but wrote the
most influential early
“textbook”
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