Morden accounting is not an overnight result of a sudden change in any event. It has reached the present stage through an evolutionary process of thousands of years.
Based on the data received from the history of evolution & the features of gradual development, history of Accounting can chronologically be classified into 4 stages as:
1.Emergent stage (from a primitive age to 1494 AD)
2. Preanalytic stage (1495 – 1799)
3.Development i.e. analytic stage (1800-1950)
4. Modem age (1951- onward).
1.The Emergent Stage (Primitive to 1494)
The emergent stage of Accounting emerged keeping pace with the following chronological stages of the history of human civilization:
A. Stone stage.
B. Primitive stage.
C. Barter stage.
D. Currency stage.
A. Stone Age:They kept accounts of their collected fruits, hunted animals and lent goods to others by marking ticks on the trees, on the walls of the caves of mountains and stones, or making holes or symbols as per their need.
B.Primitive stage:This stage started just with the beginning of the social life of human beings. People of this stage, kept their accounting marking ticks on the walls and making rope-knots.
C.Barter stage:Exchange of Goods with Goods
D.Currency stage:Through the evolutionary process at one stage the use of money started. At this stage agriculture, industry and trade and commerce flourished.
Possibly the concept of debit and credit came into being from that time. Luca Pacioli is considered the father of Accounting.He was indeed the first man who explained the double-entry system in detail in written form but he cannot claim to be the innovator of this system.
2.Pre-analytic Stage (1495-1799)
The 3rd chapter of the famous book of Loca Pacioli i.e. accounting was reprinted in 1504 wherein he discussed and explained the rules of determining debit and credit and preparation of journal, ledger and trial balance.
Introduction of going concern concept
Introduction of the periodic concept
Introduction of money measurement concept
3. Development or Explanatory Period (1800 -1950)
As a result of the industrial revolution and appearance of the Joint Stock company, large-scale production, multi-scale production, and wider competition, the desire to earn a maximum profit and government control created new problems and various complexities in the field of the accounting system.
The necessity of the accounting analysis process was felt to find out the solutions to these problems and complexities.
• The concept of depreciation and cost-accounting came into force because the business concerns became long term.
• Father of Scientific Management F. W. Taylor emphasized efficiency increase in the field of production.
• A standard costing-system was introduced as an effective means of cost control rather than cost determination.
• Taxation on business.
4. Modern Period(1951- onward)
• National and international professional organizations together introduced some accounting principles which are known as Generally Accepted Accounting Principles (GAAP) to make the accounting principles equally meaningful to processors and users of accounting information.
• Accounting Standards are formulated on the national and international levels.
• Mechanized Accounting and Auditing.
Recent Developments in Accounting:
Human Resource Accounting: Human Resource Accounting is a new branch of accounting which means accounting for people as the organizational resources. It is the measurement of the cost and value of people to organizations. It involves measuring costs incurred by an organization to recruit, select, hire and train and develop employees and judge their economic value of the organization.
Social Accounting :Social Accounting is the process of measuring, monitoring, and reporting to stakeholders the social and environmental effects of an organization’s actions.
Cloud Accounting: Its a new way of accessing your accounting software from the web browser without actually installing it.Its also referred to as online accounting.A major benefit of cloud-based accounting software is the data backup and disaster recovery is often a part of your account.
Important Points:
In 1854, Queen Victoria created the profession of chartered accountants.
Institute of Chartered Accountants of India (ICAI) -1949
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