For whom the Accountant First Tolled

How does an owner get workers to act in the best interest of the owner and not the interests of the workers themselves? This is the question that accounting has sought answers for from its inception.

Babylonian agents needed to
account for their sales to
the owners of the property

The earliest accounts of accounting are from ancient Babylonia. As businesses became bigger than just what the owner could sell, they started hiring agents, people to sell their things on the owner’s behalf, similar to how CEO’s run a company today for the owners (the stockholders). In ancient Babylonia there was a law which “required…an agent selling goods for a merchant [to] give the merchant a sealed memorandum quoting prices” (Chatfield 5). Essentially the law required that when someone bought something from an agent, the purchaser wrote down the price, sealed it, and gave it to the agent. The agent then needed to deliver that memo, still sealed, to the owner. This way there was less ability for the agent to steal from the owner, and the owner was able to know exactly what price the items were sold at.

The ancient Greeks had other ways of ensuring the well being of the money. First, they had government revenue accounts that they public could see. Literally the writing was in a public place and it showed how much money was in the account. This way there was transparency, it would be difficult to steal without someone noticing. As another safeguard whenever someone was released from the public treasury, their own personal accounts would be audited. This way it could be discovered of that person stole while in office.

Today accounting still takes on the role of trying to get the workers to do what is best for the company as a whole, but that is only part of what it is today. The other side of accounting today looks forward, not backwards. And this change happened during the industrial revolution.

Ancient industry was almost exclusively farming

In ancient times, when farming was most of the industry, there weren’t questions about how much should be produced, or what direction should the company go. It was just go make food. But with the industrial revolution came new questions. If we produce too much, then the market price crashes and we lose money, so how much should be produced? Or if the costs go up as we make more items, where should we stop producing to still make a profit? Such questions never occurred before, and thus a new side of accounting was born. Now, in addition to looking back, accountants look forward.

Works Cited

Stocks, Kevin. Personal Interview. 3 December 2014

Chatfield, Michael. A History Of Accounting Thought. Hinsdale: The Dryden Press, 1974. Print.