Business Business Business... Numbers

Accounting in Antiquity

The age of the accounting trade is frankly a sad commentary on the world. Of all the things humanity has created – arts, theatre, technology, medicine – keeping track of money/valuables is one of the oldest. Even back to the days of the flood, Noah was instructed to take an accounting of the Lord’s valuables (His creations the animals). Down through Moses we have records of accounting (i.e. the entire book of Numbers). Trade records and bartering systems were al accounted for and assessed, if not on a social level then on an individual one. Men have always been trying to be richer than his neighbor. And how does he know he’s rich? He accounts for what he and his neighbor have. In ancient Greece, officers were required to give accountings of the fund entrusted to them at the conclusion of their service. They were expected to properly manage the funds that had been given them. The importance of wealth and stewardship were not lost on the Greek and so they were sure to require an accounting of those who had been given so much. In ancient Rome, accounting played a particularly important role in leading the home. Fathers were expected to keep track of the accounts of the home. Fortunately, the lack of credit cards and predating of shopping malls made monitoring teenage spending significantly easier. Most purchasers were made with cash; however, there are clear indication that receivables and payables were set up with merchants and customers. As time lapsed into the medieval ages, we say an apparent retrogression of the accounting systems however apparently “Charlemagne had an elaborate system of accounting for income and expenditures and required detailed reports from all his subordinates.” (Kester, 1917)

Accounting in a less Ancient Time

Accounting has been formalized and structured over the centuries. In fact, the reliance on the way we account for things has a tremendous impact on everyone’s daily life. The value we give to different currency; the prices floors and ceilings that certain markets and commodities bear; and the amount of money we pay in taxes each year all depend how we account for our money. On a nationwide scale, the most significant change to the accounting system in recent history is the Sarbanes-Oxley act passed in the wake of the Enron/Arthur Anderson debacle (Koehn and Stephen, 2004). This act revamped the way big businesses are allowed to account for their money. How does this affect the average consumer? Corporation now have to pay significantly more to have their accounts managed, these types of costs are always passed on to the consumer.

Accounting has been around a long time, and will be around forever. At the very least, men and women will always be required to give an accounting of the labors, which very well may include how we spend our money/substance.

Kester, R. (1917). Accounting - Theory and Practice. In Accounting Theory and Practice (pp. 2-4). New York: Ronald Press Company.

Koehn, Jo Lynne, and Stephen C. Del Vecchio. "Ripple Effects Of The Sarbanes-Oxley Act." CPA Journal 74.2 (2004): 36. MasterFILE Complete. Web. 4 Dec. 2014.

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.