The origin of accounting primarily consists of the establishment of human society and commerce. The idea of accounting is an old practice that has been dated since the Mesopotamia era. During this era, trade between tribes around Mesopotamia required records to be kept on stone and clay tablets. This took place at least 3600BC, where in those times, the ‘scribes’ who possessed a knowledge of writing also served as bookkeepers. Overall, accounting has made significant contributions over the past five and a half thousand years.
The first samples of what we called “writing” were believed to be actual records of transactions from more than 5,000 years ago. Many scholars considered that accounting systems were in use which had counterparts for our modern ledgers and receipts. Even the ancient Egyptians had a far more sophisticated system of accounting because of their advanced systems of distribution. Their system demanded quantities of different commodities to be stored in warehouses and disbursed (as required) over time. They often updated their goods and what had been consumed; One set of scribes would record the amounts that were brought into the warehouse while the other set of scribes would record any outward movements. A third set of scribes that functioned as auditors, would compare both sets of records and check with the quantities remaining in the warehouses. This system was made clear that the Pharaoh wasn’t being cheated in the transactions that were carried out. Rulers during that time also required accounting records to be collected for tax purposes.
Max Weber, a German economic thinker, believed that for capitalism to work, average people need to know how to do double-entry bookkeeping. This is not just because of the possible ways in which to calculate profit and capital by balancing debits and credits in parallel columns; it is also because good books are “balanced” in a moral sense.
During the times of the Italian Renaissance, one of the most forgotten facts was that they highly depended on a population that was fluent in the language of accounting. Merchants and property owners used accounting not just for their businesses; They also used it for getting in touch with God, their environmental settings and family members. Francesco Datini, a famous Italian merchant wrote “In the Name of God and Profit” in his ledger books. Merchants like Datini (and later Benjamin Franklin) kept moral account books, too, for tallying their sins and good acts the way they tallied income and expenditure.
If we wanted to know how to make our country and companies more accountable, we should study the Dutch. In 1602, the foundation of modern capitalism was invented which was the first publicly traded company and official stock market in Amsterdam (the Dutch East India Company). It was their older and well-maintained culture of accountability that kept these institutions stable for a century. The double-entry...