• Bookkeepers emerged when societies used the barter system and needed to record the agreements they were making regarding goods or service transactions.
• Later accounting ledgers were completed by hand and used either a single-entry or double-entry system.
• Luca Pacioli, a monk, laid the groundwork for modern accounting creating independent records that provided a clearer picture of an entity's financial activities—the financial statements.
• The railroads and the emergence of corporations were the stimuli for the establishment of accounting professionals.
• Always finding ways to improve accounting and AP processes, inventors started to create machines for mathematical calculations. In the 1880s, American William Burroughs invented the adding machine. Early adding machines did not have the critical features of a computer, such as internal memory. However, they enabled accountants to carry out arithmetic with higher accuracy and efficiency.
• In 1978, the accounting world saw the birth of Visicalc. It was the first spreadsheet software that enabled financial modeling on the computer. During the same year, Peachtree Software introduced an accounting software package for the early personal computer. As a result, companies could computerize their accounting at a fraction of the cost of purchasing a mainframe. In 1998, Quickbooks was launched. It soon dominated the market for day-to-day bookkeeping. Today, over 4.5 million companies use Quickbooks, making it the most popular accounting program in the U.S.
• Another shift in the history of accounting occurred in early 2000. The financial world experienced the entry of Advanced-Data Capture: Optical Character Recognition (OCR) and Intelligent Data Capture (IDC) technology, which enables the automation of the accounts payable process.
• A 2018 study by Atherton Research predicted that accounting tasks, as well as payroll, tax, banking, and audits, would be completely automated using AI-based technologies by 2020. And indeed, in the two years since the release of the study, AI has played an increasingly important role in the accounting industry, bringing with it both opportunities and challenges.

As we all know, the current pandemic is quickly changing the landscape of many businesses, accounting included. So many companies are going full-virtual, with others struggling to reopen. If you are considering starting an accounting practice or looking for ways to sustain and grow your current accounting practice, in spite of our shifting world, the following articles from our peers in accounting will help you to make the smartest decisions:

The Shifting Roles of Accountants--This article from CPA Practice Advisor covers how technology has steadily optimized the common roles and tasks of accountants, with some of the largest leaps in technology eliminating those tasks and leaving professionals with more time than ever.

7 Steps to Safely Reopening Your Accounting Practice During Pandemic--This article, also from our friends at CPA Practice Advisor, offers great advice for those of you who are getting ready to try and get back to business as usual.

5 Steps For Switching to a Virtual Tax Firm--This downloadable guide from Accounting Web will help you transition to a full-on virtual accounting firm. This guide by experts at Canopy Tax and the legendary Jason M. Blumer, CPA -- a veteran of remote teamwork -- explains the thinking and processes you should employ to build a resilient and profitable virtual firm.

How to Start an Accounting Advisory Business--Thomas Reuters has this great guide for starting an accounting advisory business. In times of economic uncertainty, clients crave certainty wherever it can be found – and clarity in the absence of certainty. This is the time for your value to be re-established: not simply as the one who can do the rear-view tasks that are required, but as the one who can help look forward to making the right decisions for the future of that business.

The Rules of Thumb blog from MoneyThumb hopes the above-referenced articles will help you get a handle on how to either create a new practice or advance your current accounting practice. We'd like to suggest one other way to help your accounting practice, whether new or current, and that is the use of our PDF financial file converters specifically designed for accountants. Take a test drive today and you will be able to experience how this best selling accounting software from MoneyThumb can make your life simpler and more efficient, whether in real life or virtual.

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In India, Chanakya wrote a manuscript similar to a financial management book, during the period of the Mauryan Empire. His book "Arthashasthra" contains few detailed aspects of maintaining books of accounts for a Sovereign State. The Italian Luca Pacioli, recognized as The Father of accounting and bookkeeping was the first person to publish a work on double-entry bookkeeping and introduced the field in Italy.

The modern profession of the chartered accountant originated in Scotland in the nineteenth century. Accountants often belonged to the same associations as solicitors, who often offered accounting services to their clients. Early modern accounting had similarities to today's forensic accounting. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.

Over the decades accounting has changed dramatically, especially with the advent of the internet. Now, most accountants are very tech-savvy and use the cloud as much as possible to handle accounting tasks.

Some differences between the old and new

Despite the advancements, there are major differences between modern, techie entrepreneurial accountants and old-fashioned accountants. Some of the differences are as follows:

• ‘Old-fashioned’ accountants tend to work in a traditional office during normal business hours. They are usually employees of another company or accounting firm. Modern ‘techie’ accountants can work in the office or at home. They made be employed by one or multiple companies. They set their own pace and working hours.
• Modern accountants are not limited by physical and geographical boundaries. They are able to work remotely and offer their services to foreign-based companies through their use of modern technology. They are less susceptible to a particular country’s recession than old fashioned accountants. An accountant who is based in South Africa can provide accounting services for a company in Bermuda.
• Old fashioned accountants do not work online nearly as much as the ‘new breed’. They have accounting systems that are on their desktops and laptops. Once they leave the office they leave their work. Modern accountants are able to work online through internet-based accounting systems like Quickbooks online. They are able to use their accounting systems in their offices and at home.
• Modern accountants are entrepreneurial. They offer their services and get paid for the job done. They run businesses in which they are the employee(s). They might also subcontract the work or employ other accountants. Their employees may also be located in other parts of the world. The employees may work from the office or their home.
• Modern techie accountants are always in touch with changes in the global world as they tend to manage their business from a global perspective. Old fashioned accountants usually look at things from their country’s perspective. Changes in the global world, as long as they don’t affect their country, do not concern them. They usually change things when it is a legal requirement or when it is too outdated.
• Modern accountants are able to advise their clients from global business trends and perspectives. They have a thorough knowledge of how the global business community operates and behaves. Old fashioned are not well versed with the global business community as they’ve not needed to be, in general.
• Modern accountants offer business owners a wide variety of service providers to choose from. This is because when a business owner is located in a country where the cost of accounting services is very high, they can get services from another country where the cost is reasonable.

As the provider of the best selling PDF financial file converters on the market, MoneyThumb would like to add that accountants who want to stay modern and on the cutting edge use our proprietary software to make their jobs much easier by quickly converting the financial information of clients as a way to provide the best service.

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Today the Rules of Thumb blog from MoneyThumb would like to take the subject of fascination one step further and review the history of accounting. It really is VERY interesting. We found the following fascinating facts about the history of accounting at Investopedia:

"The name that looms largest in early accounting history is Luca Pacioli, who in 1494 first described the system of double-entry bookkeeping used by Venetian merchants in his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.” Of course, businesses and governments had been recording business information long before the Venetians. But it was Pacioli who was the first to describe the system of debits and credits in journals and ledgers that is still the basis of today's accounting systems.

The industrial revolution spurred the need for more advanced cost accounting systems, and the development of corporations created large groups who were not part of a firm’s management but had a vested interest in the company’s results—namely, shareowners and bondholders who provided external financing. The rising public status of accountants helped to transform accounting into a profession, first in the United Kingdom and then in the United States. In 1887, thirty-one accountants joined together to create the American Association of Public Accountants. The first standardized test for accountants was given a decade later, and the first CPAs were licensed in 1896.

The Great Depression led to the creation of the Securities and Exchange Commission (SEC) in 1934. All publicly-traded companies were required to file periodic reports with the Commission which had been? certified by members of the accounting profession. The American Institute of Certified Public Accountants (AICPA) and its predecessors had responsibility for setting accounting standards until 1973 when the Financial Accounting Standards Board (FASB) was established. In WHEN TK, the AICPA, and the FASB began to establish the Generally Accepted Accounting Principles (GAAP) standards for the U.S. The accounting industry thrived in the late 20th century, as the large accounting firms expanded their services beyond the traditional auditing function to many forms of consulting. However, as their responsibilities expanded beyond that of financial watchdog, accounting firms also began to get embroiled in corporate scandals.

The Enron scandal in 2001 had broad repercussions for the accounting industry. One of the top accounting firms, Arthur Andersen, went out of business and, under the Sarbanes-Oxley Act, accountants faced tougher restrictions on their consulting engagements. One of the paradoxes of the profession, however, is that accounting scandals generate more work for accountants, and demand for their services continued to boom throughout the early part of the 21st century."

If you are a bookkeeper, accountant, or CPA we think you will agree that the above information is quite fascinating. The Rules of Thumb blog from MoneyThumb hopes you enjoyed learning about the history of accounting enough to share this blog post with your friends on social media. They might also enjoy learning about the fascinating history of accounting.

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Ancient Accountants of Egypt, Mesopotamia, Greece and Rome

Ancient Egyptian bookkeepers kept meticulous records of the inventory of goods kept in royal storehouses. The accuracy of these records was assured by the swift and severe penalty that came if mistakes were ever discovered.

Archeologist Dr. Gunter Dreyer of the German Institute of Archaeology discovered 5,300-year-old bone labels inscribed with marks and attached to bags of oil and linen in the Abydos, Egyptian tomb of King Scorpion I.

Describing inventory owners, amounts, and suppliers, these labels of antiquity are known to be the ancient origin of the counting systems that would eventually develop into the sophisticated accounting methods we’re familiar with today.

Other ancient societies also used accounting methods, including scribes in Mesopotamia who kept records of commerce on clay tablets. In ancient Greece, the account books of bankers show that they changed and loaned money and helped people make cash transfers through affiliate banks in other cities. In ancient Rome, government and banking accounts grew out of records kept by the heads of families.

14th Century - Double-Entry Bookkeeping

The most important event in accounting history is generally considered to be the dissemination of double-entry bookkeeping by Luca Pacioli in 14th century Italy. Pacioli was much revered in his day, and was a friend and contemporary of Leonardo da Vinci.

In fact, the Italians of the 14th to 16th centuries are widely acknowledged as the fathers of modern accounting and were the first to commonly use Arabic, rather than Roman, numerals for tracking business accounts.

Pacioli described double-entry bookkeeping, and other commerce-related concepts, in his book De Computis et Scripturis – translated in English to Of Reckonings and Writings.

The book was translated into five languages within a century of initial publication. The fundamentals of bookkeeping methods used today have actually changed little since the days of Pacioli.

19th Century – The Beginnings of Modern Accounting in Europe and America

The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria granted a royal charter to the Institute of Accountants in Glasgow, creating the profession of chartered accountant (CA). Today, the longest standing societies of public accountants are found in Scotland.

In the late 1800s, chartered accountants from Scotland and Britain came to the U.S. to audit British investments. Some of these accountants stayed in the U.S., setting up accounting practices and becoming the origins of several U.S. accounting firms.

The first national U.S. accounting society was set up in 1887. The American Association of Public Accountants was the forerunner to the current American Institute of Certified Public Accountants (AICPA).

20th Century – The Development of Modern Accounting Standards

The accounting profession in the 20th century developed around, at first, state requirements for financial statement audits, and then around Federal requirements created by securities acts passed in 1933 and 1934 (which created the Securities and Exchange Commission), according to a July 1999 article in The CPA Journal.

In the 1970s, Congress and SEC demands for more reliable and comparable financial reporting led to the founding of the Financial Accounting Standards Board (FASB) in 1973. The FASB and the Governmental Accounting Standards Board (GASB) are now two of the main organizations responsible for establishing generally accepted accounting principles (GAAP) in the U.S.

21st Century – Accounting Regulation in Modern Commerce

Beyond the industry's self-regulation, the government also sets accounting standards, through agencies such as the Securities and Exchange Commission and laws such as the Sarbanes-Oxley Act of 2002, passed after the Enron and WorldComm accounting scandals.

The 21st century also saw the passage of the Dodd-Frank Act after the recession of 2008. The act contains 16 major areas of reform, including creation of the Financial Stability Oversight Council and the Volcker Rule that restricts banks from owning, investing, or sponsoring hedge funds, private equity funds, or any other type of proprietary trading operations that result in their own profit.

Looking to the Future

Accountants looking to the future have recognized that existing accounting principals in place in the United States known as the Generally Accepted Accounting Principals (GAAP), are likely to go the way of the dinosaurs at some point in the not too distant future.

The global standard outside of the US is the International Financial Reporting Standards (IFRS). As global commerce continues to grow, efforts are underway to create consistent accounting standards across borders through the widespread adoption of IFRS by American businesses and accounting firms who wish to continue to participate in the global economy.

Source: AccountingEdu.Org

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