Evidence shows that art and practice of accounting existed in Vedic times. These references are Kraya as sale, Vanij as merchant, Sulka as price in Rigveda. Arthashastra written by Kautilya contains details on business of keeping up accounts.

‘Vishnugupta Chanakya Kautilya’ popularly known as ‘Chanakya’ has been addresses as an Acharya credited with destroying the Nanda Dynasty and installing Chandragupta Maurya (321-297 BCE) on the throne. The Arthashastra contains 150 chapters, which are distributed according to different topics. It consists of three reasonable well developed parts:

1. national security issues including a foreign policy,

2. administration of justice including crime and punishment issues and

3. economic policies related to economic development, taxation, labor management and financial management

History of Accounting

Kautilya’s contribution to accounting may be classified under four headings

1. the development of principles of accounting

2. the specification of the scope and methodology of accounting

3. codification of the financial rules and regulations and the creation of an organizational structure

4. emphasizing the role of ethics in containing excessive greed, which often leads to fraudulent accounting

Jericho a city located to the west of the Jordan River, is estimated to be at least 11000 years old and is one of the world’s oldest continuously inhabited cities. It is believed that the ancient society that was situated there used a barter system until about 7500 B.C. when simple tokens and clay balls with various shapes came to represent inventory figures for agricultural goods including wheat, sheep and cattle. The use of tokens eventually expanded and tokens and envelopes helped to formulate an ancient version of what may have been a balance sheet. These tokens and envelopes helped to identify specific parties with a claim to specific inventory. Token also gradually came to represent competed trade transactions.

Mesopotamia

Accounting records dating back more than 7000 years have been found in Mesopotamia and documents show list of expenditures and goods received and traded. The development of accounting may be related to the taxation and trading activities of temples. The duties included writing up the transaction and ensuring that the agreements complied with the detailed code requirements for commercial transactions. Transactions involved use of small quantity of specially prepared clay to record the transaction, moist clay was molded into a size and shape adequate to contain the terms of agreement, wooden stylus for names of the contracting parties, signature in the form of stone amulets etc.

Egypt

The region of king Scorpion I, during the first Dynasty of the old kingdom, 3000 BC that there began to emerge a complex system of financial record keeping unknown to history. It began with meticulous records detailing inventories of goods as discovered by Archaeologist Dr. Gunter Dreyer of the German Institute of Archaeology. While excavating the 5300 years old tomb of King Scorpion I in Abydos his team unearthed bags of oil and linen bearing individual bone tokens inscribed with detailed numerical markings. It is also believed these bags of goods were actually collected as taxes. It is now widely recognized that these receipts and ledgers constitute the Ancient origin of the complex bookkeeping system.

China

Chinese civilization is characterized by a long history of agricultural economy with a culture rich in literature, art and philosophy. In Sung Dynasty (960-1279 AD) people tied knots on strings for counting events. In Shia Dynasty (2205-1766 BC) remains of shells and bones showed records of goods and livestock in kind and in quantity, a written language had already been developed. At the first stage of development of accounting, spanning three dynasties such as Shia, Shang (1766-1122 BC), and Chou (1122 BC – 250 AD) transactions were recorded chronologically in single entries and in words.

A significant development made during the Han Dynasty (206 BC- 220 AD) was to adopt format of using “In”, “Out” and “Balance” became standard usage in reports submitted on a monthly, quarterly and annual basis.

Greece

The specialist in the area of accounting history the greatest interest of this treatise lies in its use of inscriptions from the National Archeological Museum of Athens. The translated inscriptions do enrich the basic outline established through other source materials. Five black and white plates showing some of these inscriptions are of interest.

The Socio-economic environment of the golden age of Greece (5th to 4th Century BC) known as classical period, very little has been written about early Greek accounting

Rome

The Romans kept detailed records of their activities and began the tradition of publishing accounts to show where money was spent. The first emperor Augustus (63 BC- 14 AD) was the first leader to publish accounts. Augustus used his accounting to publicize his personal spending which also enables him to plan project and think about how the empire was managed. In “The Deeds of the Divine Augustus”, listed such quantities as distributions to the people, grants of land, building of temples, money to military veterans, religious offerings and money spent on theatrical shows and gladiator events. Roman historians also recorded public revenues, the amount of money in the state treasury, taxes, slaves, freedmen and more.

Luca Pacioli’s Contribution

In 1494, Pacioli (an Italian Franciscan monk) wrote “Summa de Arithmetica, Geometria, Proportioni et Proportionalita” which include bookkeeping titled, details of calculation and recording on the subjects of record keeping and double entry accounting. Pacioli’s book became the reference text and teaching tool on the subjects of bookkeeping and accounting for the next several hundred years. This was the first time that symbols for plus and minus appeared in a printed book. This book was the first known published work on the topic of double entry bookkeeping.

Accounting During the Middle Ages

During this time bartering was the primary form of money changing. When Europe changed to a monetary economy (13th Century) merchants began relying on bookkeeping to keep a record of multiple transactions. This is when double entry bookkeeping got its start, which is when a debit and credit value is entered for each transaction by the accountant.

Modern Accounting Standards

Modern Accounting authorities use a standard set of rules for reporting financial information. Accounting is the process of gathering and communicating financial information, information is in the form of financial statements, these statements describe the terms of the economic resources under the management.

Modern economies rely on cross-border transactions and the free flow of international capital. In the past cross-border activities are complicated by different countries maintaining their own sets of national accounting standards.

IFRS standards address challenges by providing a high quality, internationally recognized set of accounting and efficiency to financial markets around the world.

The International Accounting Standards Committee (IASC June 1973) was established by accountancy bodies representing ten countries. It published International Accounting Standards (IAS), interpretations and a conceptual framework. In 2001 the International Accounting Standards Board (IASB) replaced the IASC. The IASB has continued to develop standards calling the new standards “IFRS”. In 2002 the European Union (EU) agreed that from 1 January 2005, IFRS would apply for the consolidated accountants of the EU listed companies.

IFRS standards are required in more than 140 jurisdictions and permitted in many parts of the world including South Korea, Brazil, the European Union, India, Hong Kong, Australia, Malaysia, Pakistan, GCC countries, Russia, Chile, Philippines, Kenya, South Africa, Singapore and Turkey.

US Generally Accepted Accounting Principles remains separate from IFRS. The Security Exchange Committee (SEC) requires the use of US GAAP by domestic companies with listed securities and does not permit them to use IFRS.

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