8 Interesting Facts to Know on the History of Accounting
Accounting is one of the most important aspects of business today. From keeping track of income and expenses to understanding how much money you need to make to stay afloat, accounting plays a key role in determining your company’s success. While there are many different types of accountants, it is interesting to learn about the history behind this profession that has become so integral for businesses today.
1. Accounting is a relatively new profession.
Accounting dates back to ancient civilizations when people began keeping track of their creations and sales using simple methods such as clay tokens, etched bones or stones, and notches on wood or reeds. The history of accounting can be traced back to 9000 BC when receipts were given for livestock and crops in Mesopotamia. The profession grew out of necessity with the advent of units of currency. Merchants needed to keep track of money owed or received thus creating a need for someone with a formal education in mathematics and business practices to record these transactions.
2. Accounting became a recognized profession during the industrial revolution.
The industrial revolution took place from 1750-1850 and was marked by a transition from an agrarian to an industrial economy which created a need for accountants who could determine wages, manage payrolls, and track inventories of businesses. In 1854, Dr. Robert Halsey called for formal training in accounting soon after forming the New York Association of Public Accountants. He felt that there should be a degree or certificate required before one could call themselves a certified accountant.
3. Women have played a significant role in accounting since the beginning.
Since the 1800s, women have worked as accountants by keeping track of ledgers and making deposits. William Cooper Procter, an American candlemaker, hired his wife to keep his books. She would later go on to secure another job for her daughter working as an accountant after she completed school. This story is similar to many other women who helped their husbands run mills, plantations, etc., throughout history. Often they were even paid more than their husbands!
4. The first US licensing exam took place in 1898.
The passing rate wasn’t very high– only three out of ten aspiring accountants passed this two-day test but it was considered a good start for the new profession. A few years later, New York University established its School of Commerce where students could earn a Bachelor’s or Master’s degree in accounting.
5. Accounting is evolving with technology.
With the advent of computerized ledgers and electronic filing systems, the job responsibilities of accountants have changed dramatically since entering this field. Perhaps one of the most significant changes has to do with financial reporting which used to be done annually but now begins at an earlier stage in preparation for new SEC rules on quarterly reporting. Other recent advancements include instant access to information through mobile devices, instant audit assistance via online “chatbots”, etc.
6. An accountant discovered King Tutankhamen’s tomb.
Howard Carter was an English archaeologist who worked closely with archaeologist George Herbert, 5th Earl of Carnarvon to find the tomb of King Tutankhamen. They were looking for King Tut’s lavish tomb which was rumored to be filled with gold treasure, etc. Carter found many artifacts there but only one piece stood out to him– a gilded wooden couch that he knew once belonged to Tut because of its distinct features. His accounting background helped him recognize this valuable artifact!
7. Accounting students study ethics.
No matter what degree or certification you earn as an accountant, it is required that you learn about ethics and the meaning behind them even if they apply differently depending on your industry (i.e., not all accountants need to know about Sarbanes Oxley (SOX)). For example, in the accounting profession, accountants are expected to uphold high standards that include but aren’t limited to: maintaining confidentiality, making data-driven decisions/assertions, engaging in ethical behavior at all times, etc.
8. Billionaire Warren Buffet is an accountant.
Warren Edward Buffett has a net worth of $74.9 billion and credits much of his success to his accountant father Howard who helped him create investing strategies and taught him how to think about finances in terms of business rather than personal accounts after he got married and had children. Some of Buffett’s other influential advisors include Charlie Munger and Benjamin Graham.
No matter what side of the profession you’re on, whether you’re an accountant or not, it’s hard to argue with the fact that accounting has been a fundamental part of business and money management from the beginning. All of us rely on accountants for different reasons either directly or indirectly without them, our economy wouldn’t be nearly as strong! It’s important to remember the history behind this profession and how it continues to evolve.