Question

Double entry book-keeping has been in existence for a long time. In fact, it revolutionised the way in which accounting records were kept and what they tried to record. Many events, including the emergence of this form of recording caused the role of the accountant and the purpose of financial statements to change.

Required:
Discuss the emergence of accounting as it is today. Identify the major historical events that stimulated change in the way financial statements are prepared.

Answer 1

Answer To the above question:

The emergence of accounting as it is today:

Luca Pacioli is recognised as the father of accounting and book keeping. He was the first person to publish the work on double entry bookkeeping.

Early modern accounting has similarities to today's forensic accounting. It is a product of centuries of thought, custom, habits, action and convention.

Accounting is a system of recording and summarising business and financial transactions.

The history of accounting can be traced to ancient civilizations and is closely related to developments, writing, counting and money.

In India, chanakya wrote Arthashastra which contains detailed aspects of maintaining Books of Accounts.

Other Accounting records were found in ancient Babylon and Sumeria period. At that time people used Accounting methods to record the growth of crops and herds.

Commerce and business has expanded the role of accountants since the second millennium.

By about fourth century, Egyptian use Auditing Standards for checking the movement in and out of the warehouses.

By the middle of 19th century, London was the financial centre of the world. The growth of manufacturing sector increased the demand for technically proficient accountants who are able to calculate complex figures like valuation, depreciation.

To improve this status, local professional bodies in England amalgamated to form The Institute of Chartered Accountants in England and Wales which was formed by just 600 members.

At present, U.S. GAAP and IFRS Accounting Standards and Principles are being followed to represent the financial statements to the stakeholders so that they can make informed decisions and get a true and fair view of the state of Affairs of the company and its organisation and also the financial performance.