The History of Accounting (Part 1)

Ok, here is the History of Accounting, the first in a feature series of articles which I will be publishing which closely follow the lessons taught in class. All my students are encouraged, oh I mean MUST read these articles and use it in their lessons (and generate more readership for my blog!).

Without further ado, here it is:

The History Of Accounting: Age of Record-Keeping

Accounting, as we know it today, is more than just numbers and figures put together to represent how much money a business/individual/group has. Accounting is the art of recording value, and it is an art which has been around for thousands of years.

Back in the early days, before the invention of computers, the internet or even the number zero, record-keeping existed among early human tribes. Of course, back then the primary means of recording was through crude, rudimentary drawings of objects or they were represented by stone chips thrown in a basket (assuming you could afford a basket back then).

Why was there a need for record keeping? Well, consider this, say you are living off the land in a fur-clad tribe of say maybe 20 people, including women and children. Human beings, like all creatures of God, need to eat to survive, so you take some 5 of your strongest, most able bodied men to go off and hunt. After a long, tiring day of hunting, you come back, tired, sore and hurting with a meagre 5 rabbits to share with 20 people. As the leader of your tribe, you can’t simply give the 5 rabbits on a first come first serve basis, but you needed to be able to divide it equally amongst your tribe members so that everyone can survive the day (note that surviving back then was a lot more difficult than it is today). So cutting the 5 rabbits into 20 equal portions (as equal as cavemen can) you distribute it among your tribe members. How do you ensure that each tribe member takes only what is due to them and nothing more and that everyone gets a fair share? Note that failure to do so will result in the eventual death by starvation and/or hunger-driven violence of your tribe.

And this is how record-keeping saves the day. You have a resource (Rabbit meat) and you have an interested party (Hungry cavemen/women). In order to fairly distribute the resources and keep track of it, you need to make a physical mark, hence the birth of the crude drawing. If you couldn’t draw, you can use stone chips to represent a portion of rabbit meat, and keep it in a basket (or whatever stone-age holding thing they had back then).

So there we can see how record-keeping is an integral part of mankind’s social evolution from naked animals to the suit-wearing, smart-phone using techno-god of today.

Next: Double Entry- The Accountant's Greatest Weapon against Financial Stupidity!