History of Accounting

Accounting is as old as civilization and among the most important professions in economic and cultural development, says Gary Giroux, the Shelton Professor of Accounting at Texas A&M University.

Giroux is a well-respected accounting authority who has written about the history of accounting, among other business-related topics. He sees accounting as a reflection of the civilizations it served. Accountants, he said, created the business climates that supported important cultural transformations such as the Italian Renaissance, through techniques such as double-bookkeeping.

Later, it was accountants who took businesses to the next level. Cost accountants may not have been the “inventors and the entrepreneurs of the Industrial Revolution,” Giroux writes in A Short History of Accounting and Business. “But the entrepreneurs that survived the inevitable depressions were. Continued success (and avoiding bankruptcy) required accounting expertise.”

Accounting expertise helped bring about “mammoth” monopolies epitomized by Standard Oil, a holding company formed in 1870 to control the burgeoning oil market. U.S. Steel, founded in 1902, was the first billion-dollar corporation. Giroux points to British and American cost accountants as the authors of the methodologies that let these “corporate moguls” control the business climate. (Part of this methodology was to buy or drive competitors out of business, which eventually led to laws such as the Sherman Anti-Trust Act and later legislation that outlawed monopolies and created a climate for competition.)

Giroux says that the computer and resulting Information Revolution created and sustains today’s business and accounting practices. They replace error-prone functions like recording accounts receivable and payable, inventory recording, and payroll functions. Today, he says, accountants actually “struggle to keep pace with technology.”

But, Giroux says, accounting is now tied to technology—not business models—to a “surprising” degree. That is because technology is now one of the strongest players in our civilization. Accounting has always been tied to the rise and fall of civilizations, he says—making technology the key player in the future of the profession.

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Sources:

Giroux, Gary. “A Short History of Accounting and Business.” Accounting History Page, Mays Business School at Texas A&M University. Web, 1999.  5 April 2011.