Evidence of accounting practices goes back nearly to the advent of agriculture. Once people had goods to exchange with one another, they wanted ways to keep track of their transactions. Early systems of accounting even predate some systems of writing and arithmetic.
In the ancient Fertile Crescent region, which is now the Middle East, people used various accounting systems as far back as 12,000 years ago. Some of these accounting methods used clay and other materials, fashioned into small pieces, which would represent capital. Other evidence shows that early accountants made marks in wet clay that later dried to form a record of property transactions.
Over the next several millennia, accounting tools morphed from small pieces of clay into more sophisticated items, such as the abacus. The invention of papyrus also made record keeping easier and thus more widely used because it was less arduous to mark than a chunk of clay.
Remnants of ancient accounting systems have been found all over the world, from the Middle East to the Americas to Africa and Asia. People began to document their property, history, and other achievements as more advanced forms of writing and communication became available. Ledgers date back at least as far as 2000 B.C., even before currencies were widely used. People wrote down what they traded and what they received in return. Later, single-entry bookkeeping emerged after forms of money gained popularity as a means of exchange.
Once currencies became widely used, some of the earliest accounting careers took shape. Tradesmen and merchants did not always want to take responsibility for maintaining their records themselves, so they would hire outside help. Records kept by these Renaissance accountants often took the form of single-entry ledgers until an Italian by the name of Luca Pacioli popularized the double-entry ledger—still used today—with the publication of his bookkeeping textbook detailing his duties.
According to Pacioli, good accounting practices were paramount to maintaining a successful business. Pacioli taught that keeping a business’s credits (money owed) and debits (money received) in separate columns would be a more organized way to make sure the books were balanced. He also taught the importance of keeping detailed records of every single transaction, including the amount of the transaction, who the transaction took place with, and any other relevant information. Although some bookkeepers may have been using these practices long before Pacioli, he was the first person known to publish accounting recommendations that are still in use today.
Pacioli’s accounting practices may well have been a product of his time. When his textbook was published in 1494, he was living in a society that had developed currency, private property, sophisticated systems of writing and arithmetic, and trade that was expanding beyond a mere exchange of goods between neighbors. The advent of credit systems, or paying in the future for something that you would receive now, also led to the need for good accountants. When goods and services were exchanged on the spot, there was less of a need to account for all the completed transaction’s details.
European accounting practices migrated to North America during colonization. For the most part, accountants of the eighteenth and early nineteenth centuries worked for the purpose of informing a business owner of how well the business was doing. The role of accountants expanded during the second half of the nineteenth century as increased access to transportation across the United States made businesses operate on a larger scale.
Specifically, as commerce made its way across the railroads, demand for accounting careers grew. Businesses were expanding and shipping their goods across the country. Buying shares in a business became more popular than it had been before, and now, business owners were accountable not only to themselves but to those who had invested in their companies. A good accountant was necessary to balance the books for a business owner and also to prove to investors that their money was in good hands.
In 1896, a law was written describing the designation of a Certified Public Accountant (CPA). In order to become a CPA, a person must have worked in the accounting field for a set number of years and pass a test administered by the state. This landmark legislation was the foundation of accounting careers today.
Accounting has continued to evolve. Now, many accountants do more than merely balance the books of their clients; they use the data they find to make recommendations about how to run a business more efficiently. Accountants today work for a wide variety of organizations, from all levels of government to nonprofits to major corporations.