Accountancy is one of the most innovative occupations. It has contributed to the development of cities, money, banking, finance software and concepts of numbers and wealth over its history. The earliest accounting records can be traced back to the Babylonian Empire of 4500 B.C., Code of Hammurabi of 2250 B.C. and ancient Egypt ruled by Pharaohs. Taxation was crucial to the prosperity of these early governments. Similarly, record keeping and accountancy became important systems for maintaining social order in the governments as is the case today.

The Italian Renaissance

The Italian Renaissance helped people refine their artistic accomplishments and elevate accounting to new heights. During this time, Venice was the business capital of Europe. It was here that merchants invented the double-entry accounting system. Fra Luca Pacioli, a renowned mathematician, teacher and close friend of Leonardo da Vinci, observed the new accounting system in practice and wrote his famous book The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality, which is also referred to as the Summa.

Pacioli’s Summa

Pacioli’s Summa was among the first books on accounting ever published. The book was published in 1494 and was an instant success. It addressed double-entry accounting and record keeping. It was later translated into English, German, Dutch and Russian and grew in popularity to become the unrefuted reference “textbook” on accounting for the next 500 years. The authority of the book earned Pacioli the enviable title of Father of Accounting.

Double-entry accounting

Pacioli did not invent double-entry accounting, but he brilliantly described the accounting system as was practiced by merchants in Venice during the Renaissance. The system followed most of modern day’s accounting routines, such as use of ledgers, memorandums and journals. Pacioli’s ledger, for example, included income, expense accounts, inventories, liabilities assets and receivables. Pacioli also made references to book certification and cost and ethics accounting in his classic book, paving the way for modern statements of financial position.

Modern statements of financial position

Pacioli’s double-entry accounting system was based on data obtained at the end of a given accounting period. Usually, financial statements and reports drawn under the system were accounted a fortnight after month-end. Changes in information technology, however, led to the need for financial and accounting data to be provided immediately whenever needed.

To meet modern accounting needs, data base information systems and finance software that allow enterprises to conceptualize and gather quantitative and qualitative performance indices were invented. It was not until 1868, however, that modern trial balances sheet begun to take shape and the 1980’s that modern statements of financial position were developed.

Accountancy trends in the information age

Trends in the information age are re-defining and re-conceptualizing accountancy in line with the sophisticated needs of modern business enterprises. Excellent accounting and finance software applications like Quickbooks Pro, Pacioli 2000 for Windows and Iris Exchequer have been developed. These inventions emphasize a move away from the old quantitative accountancy approach to a focus on improving innovation, quality and customer satisfaction.

James Bentham is writing on behalf of Iris Exchequer, who specialize in financial software. He has been creating web content for over 6 years and particularly enjoys covering business/technology topics.

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