Accounting dates back to the age-old days where clay tokens and the abacus we used. Accountants participated a great deal in the development of cities, trade, and the concepts of wealth and numbers, but it was not until the commercial revolution that double-entry bookkeeping was introduced in Italy, which fueled the Italian Renaissance, saved many Industrial Revolution inventors and entrepreneurs from bankruptcy and helped develop the confidence in capital markets necessary for western capitalism. A hundred years after this, a Franciscan monk Luca Pacioli authored a book on mathematics. This listed that merchants require three things in order to maintain efficient bookkeeping: adequate cash or credit, a competent bookkeeper and an accounting system. These days, accounting is offered commonly as a major at universities. Here are some things you, as a soon-to-be accounting major, should be aware of about accounting and the technological advancements in accounting.
Cost accounting is defined as “The discipline of estimating, tracking and controlling product and service costs”. It came into existence in the eighteenth century and it was by a very famous potter! - a very unlikely source! A person called Josiah Wedgwood was incredibly talented with a flourishing business till a depression hit them, after which he noticed that his workers were stealing a lot of money and also did not carry out the paperwork which was required, he decided to come up with a method to stop all of this, this later was known as cost accounting.
Wedgwood took histime to examine his books meticulously, discovered inefficient operations and the importance of working out overheads into the expenses of his work. He discovered a history of embezzlement by his head clerk when he realized that his accounts did not agree. After this, he appointed a different clerk and began carrying out weekly inspection of his accounts. Historians say that this is how “sunk costs” and “economies of scale” were discovered. By changing the prices for his products to echo the effect of demand, and by creating both high-end as well as a lower quality line for the mass market, Wedgwood’s business was one of the small numbers of companies that continued to exist after that depression. His cost system also influenced wages paid and types of employees.
It took accounting another fifty years to gain recognition as a profession. The mid-nineteenth century London witnessed a company of clerks who advertised their line of work as “accomptants”. The increase in business regulations increased hand in hand with taxes, and the need for professionals who would keep financial records and audit and inspect them skyrocketed. The first accounting firm to open was in London in 1845. However, technological advancements in accounting, for example, software did not come about till much later.
The history of financial accounting was altered greatly by computers and accounting software which has been developed. Accountants are central to the information revolution that is transforming the global economy. There is a continuous evolution taking place in accounting technology which assures them career stability in the years to come.