History

The history of accounting

Accounting originated in ancient times when people needed to keep records and controls of their properties. They had to find a way to record certain arithmetic calculations that were frequently repeated and too complex to keep in their heads. Since the earliest civilizations, rudimentary arithmetic operations were performed, and many of these operations led to the creation of auxiliary elements to count, add, and subtract, etc. taking into account units of time such as the year, months, and days. As an example of these activities, money was created as the only exchange instrument.

The Phoenicians, skilled traders and excellent navigators, from 1,100 BC onwards, were perfecting the accounting systems implemented by the Egyptians, which were gradually disseminated. They were also known as the geniuses of trade in ancient times. It was from the 13th century that the first type of accounting by charges and expenses used by people in finance at the time began.

Throughout history, it has been shown that in ancient Egyptian and Roman times, accounting techniques were used that, in some way, basically constituted records of entries and exits of commercialized products. In Egypt, scribes were responsible for keeping accounts for the pharaohs, as they could record the lands and goods conquered.

In 1458, Benedetto Cotrugli referred to the double-entry system in his book “Della Mercatura Et del Mercante perfecto” where he indicated that every merchant should keep three books: (General, Journal, and Draft). He also suggested the convenience of making an annual balance based on the General book. His main merit was to lay the foundations for Fray Luca Pacioli to develop and perfect the graphic accounting method years later.

In 1494, Fray Luca Pacioli published his first work “Summa de Arithmetica, Geometría, Proportioni et Proportionalitá” (printed in Venice), where he set forth the fundamental principles regarding accounts and books. He explained everything about double-entry and also dealt with the accounting records of merchants. He was considered the father of modern accounting. During the 16th century, the progressive diffusion of double-entry accounting occurred throughout Europe.

Stages in the history of accounting:

The Ancient Age: Where man simply used his ingenuity to provide primitive methods that were recorded on a clay tablet. Since then, the evolution of accounting systems has not stopped its development.

The Middle Ages: From the 6th to the 9th centuries, the “Solidus” gold coin was accepted as the monetary unit, the main means of international transactions, and accounting registration was allowed through this homogeneous measure, achieving notable progress.

The Modern Age: In the early 19th century, the greatest author of his time, Fray Lucas Pacioli, was born, author of the work “TractusXI” where he refers to the double-entry system of registration and the commercial practices related to companies, letters of exchange, interests, etc. It explains inventory in detail as a list of assets and liabilities.

The Contemporary Age: It begins with the French Revolution in 1779 until today, where many changes occur due to the industrialization and commercial exchange of European countries. Another country that from the 19th century predominantly contributed to the perfection of accounting was the United States.

At the beginning of the 21st century, new concepts were introduced into the world of business, such as globalization, competitiveness, quality, productivity, strategic alliances, free trade, added value, and reengineering of administrative processes, which have increased the degree of difficulty in the operation of companies. In 1978, the accounting world welcomed VisiCalc, the first spreadsheet software in accounting history. Later, tools such as Excel and professional accounting software significantly simplified the workload.

Currently, thanks to technological advances, the phenomenon of globalization has led companies to manage a wider and more demanding market due to competition, this has made the accounting information system one of the main tools for decision-making. Accounting today goes hand in hand with technology, the computer market creates more and more financial programs and systems for the continuous improvement of accounting information in companies.

Cloud accounting

Since 2010, accounting has been present in the cloud through online accounting software. These programs, in addition to simplifying and automating processes, have allowed the integration of other programs such as electronic invoicing and continuous access to information, from any place and at any time, only with a secure Internet connection.

Some of the main accounting software are:

Wave
Senior Conta
AccountEdge
Siigo
Nubox
Alegra
Contasol

Although there are significant differences in accounting, especially between Anglo-Saxon countries and the rest of the world, the most widely used accounting method is still the double-entry method.

Accounting Schools of Thought

Since the 18th century – at the end of the Modern Age – various theories and trends arose that sought to give accounting a more scientific, economic and administrative character. This is how the so-called accounting schools of thought were born. Depending on the period and historical context, the following schools can be distinguished:

Classical Schools of Accounting Thought (18th, 19th and 20th centuries):

Accounting School: The first accounting school in history.
Theory of the Owner: Born in 18th-century Britain, it served as a precedent to the so-called agency theory.
Lombard School: Born in the 19th century in Italy and had Francisco Villa as one of its main exponents.
Personalist School: In this one, the patrimony is considered from a legal point of view; its main precursor was Giuseppe Cerboni.
Materialist or controlist school: Founded by Fabio Besta, this school opposed the schools that personalized accounts giving accounting a more economic character.

Economic Schools of Accounting Thought (20th century)

European Economic Neocontism: With Leo Gomberg as its greatest representative, in this school accounting aims at the economic activity of the company.
French Economic Neocontism: For this school, “value” is the cornerstone of accounting; its main exponents are Jean Bournisien and Jean Dumarchey.
European German Economic School: Derived from European neocontism, this school emerges in Germany with the publications of economists Friederich List and Wilhelm Roscher.
Hacendalista Economic School: Based on Gino Zappa’s hacendal economy, it links accounting with the economy of the company.
Patrimonialist School: Founded by Vicenzo Masi, this school sees the patrimony as the main object of accounting research.
American neocontism: It had among its main exponents Sanders, Hatfield and More, as well as Charles Ezra Sprague, William Andrew Paton, John B Canning and Henry W. Sweeney.

American deductive-economic school: Of positivist approach, this school appears in the golden age of pragmatic research in accounting.

Contemporary Schools of Accounting Thought

The Utility Paradigm: Increases financial information, new areas of accounting regulation appear, and a new consideration of the scientific nature of accounting emerges.
Current Empirical Research Approaches:
- Inductive Positivist Approach: Studies accounting practices to induce the principles and foundations that support them.
- Decision Model Approach (Predictive Capacity): Studies the impact of regulation on the market, the behavior of the market aggregate, and the incidence of accounting alternatives.
- Behavioral Model Approach: From the inductive positivist approach emerges inductive neopositivism; subsequently, the economic value approach theory is born.

Great Figures

Accounting, as a discipline and profession, would not have progressed without the intervention of many people throughout history. From its beginnings in ancient civilizations to its study and professionalization, accounting has had great figures, including:

Luca Pacioli: Italian religious figure, father of modern accounting.
Edmond Degrange: Italian theorist, first to explain the relationships between accounts and the double entry mechanism. He conceived the Journal-Ledger system.
Francesco Marchi: Italian economist, follower of Degrange’s work, argued that accounting was the science of accounts and was the founder of the accountant school.
Leo Gomberg: One of the main exponents of European neocontism.
Edgar O. Edwards and Philip W. Bell: American economists, authors of the classic of 20th century financial accounting: The Theory and Measurement of Business Income.
Charles Ezra Sprague: American accountant, one of the first organizers of the accounting profession.
Dan Bricklin: Engineer, creator along with Bob Frankston of the first spreadsheet program, VisiCalc.