A Franciscan friar wrote the first published guide to double-entry bookkeeping
The accounting system behind every modern balance sheet first appeared in print in 1494, in a mathematics book by Luca Pacioli, an Italian friar now nicknamed the father of accounting. The practice itself is far older, reaching back to ancient Mesopotamia, where tallying goods grew up alongside writing, counting and money.
Records of economic life are as old as civilisation. Early bookkeeping appears in ancient Iran, the Egyptians and Babylonians ran early forms of audit, and by the reign of Augustus the Roman state had detailed financial information to hand. Europe's accountants got a big efficiency boost when Mediterranean merchants swapped cumbersome Roman numerals for Arabic ones, and the double-entry method, in which every transaction is recorded twice to keep books in balance, took shape in medieval Europe, especially Venice. Pacioli's Summa de arithmetica set it down for a wide readership.
Turning bookkeeping into a profession took until the 19th century. In 1880 several local English bodies merged into the Institute of Chartered Accountants in England and Wales. Meanwhile the rise of joint-stock companies split the discipline in two. Financial accounting reports to outsiders such as investors, lenders and regulators, following generally accepted rules and often publishing statements six to ten months after a period closes. Management accounting serves people inside the company, is free of those external rules, and looks forward as well as back, producing budgets and reports on individual products or departments.
The rulebooks differ by country. In the United States the Financial Accounting Standards Board sets the principles, and in Britain the Financial Reporting Council does. As of 2012, all major economies had plans to adopt or move towards International Financial Reporting Standards, and independent accounting firms usually audit the published figures.
The vocabulary has a winding history. Account came into Middle English from Old French aconter, tied to the Latin computare, to reckon, whose root putare could mean to prune or to purify as well as to count or think. Accountant was once spelled accomptant, but since nobody pronounced the p, both sound and spelling eventually dropped it.
Source: Accounting
