History of Accounting > Accounting Timeline
8000 BC Civilization was born, fortified cities came into existence with the creation of Ancient Jericho. In this city, salt was mined and made available for trade due to proximity to this Dead Sea site. No evidence of intensive agriculture exists to support they grew their own food. It is believed that Much of their food was imported, and was primarily a trading center.
7500 BC Agriculture and tokens were the next step in the accounting timeline, and caused the need for the first accounting records to be created. Domesticated livestock and grain started at the same time, at different sites. Tokens, an early form of money, were associated with agricultural sites. These were often clay balls of various shapes (round, ovular, square, etc.) and each shape represented goods (such as two round tokens could be a pair of sheep, twelve square tokes a dozen measures of grain). This also marks the beginning of the inventory system and the beginning of the concept of numbers.
3200 BC Writing came into being. since our previous point in the accounting timeline, accounting records advanced. First from tokens representing inventory, to clay tablets, to finally the use of complex symbols and cuneiform writing in Sumeria.
3000 BC Bronze, abacus, & papyrus. Bronze was first used to make tools in the Middle East, the start of the Bronze Age. The abacus was invented in China and later made its way west. Papyrus scrolls were found in Egyptian graves.
2200 BC The Code of Hammurabi law code came about, which included law on standardized weights and measures, the substance of commercial transactions and contracts, as well as what constituted the punishment for crime. Set amounts of silver or grain were considered payment. Metal became used as money at this time in the Middle East.
7th Century BC Coins were invented in Lydia to be used as money. This all began with slugs of electrum (a gold and silver alloy) of a standard weight. Soon after, coins began being stamped with lines first, followed by more complicated designs.
5th Century BC Banking in Greece began, and by 575 BC, Athens was minting coins. Financial transactions exclusive to money in the form of coin, and money changing was the most common type of financial activity. The role the Greek bankers included the acceptance of deposits and making of loans.
50 BC Roman republic came into being which was ruled largely by the Senate. Rome used coinage, the abacus, wrote with the Greek alphabet, Roman numerals were used to record numbers, writing was done on papyrus, and they utilized banking & credit. Romans were involved in the establishment of the corporation as a property owning entity which could make contracts, and engage in many activities. This was a large leap forward in the accounting history timeline.
1 AD The Roman empire, marked by the rise of Julius Caesar, was the turning point in the republic being replaced by the empire. The start of this new era, the age of Augustus, was the Pax Romana. the Pax Romana was known as an era of peace and prosperity, which partially marked the Golden Age of Rome. Augustus Caesar was known in part for the reform of the money and tax systems. Some of the taxes imposed included general sales tax, a land tax, and a flat-rate poll or head tax.
410 When the fall of Rome happened, it was caused by Rome being sacked by the Visigoths, and following this the Dark Ages began in the West. Local areas previously under the rule of Rome became self sufficient and the feudal system developed.
1095-1270 The Crusades began, and western armies were attempting to conquer the Holy Land. In order to finance the armies, large sums of money needed to be accumulated. This stimulated banking in Europe and encouraged trade with the east. Due to their strategic trading location, Italian city states prospered as merchants extend trade from England to the Far East. Improved bookkeeping was needed to facilitate the large quantity of transactions taking place. Banking articles such as bills of exchange and clearing houses came about as a result in major European trading cities.
1066 Battle of Hastings occurs and William of Normandy conquers England. The Domesday Book was created to survey the wealth of the kingdom, which would be used to calculate taxes and England’s fiscal system.
1160-1200 Tally sticks were notched wooden sticks, notched to represent an amount of money, that evolved into credit instruments in England. The sticks would be broken in half to serve as a receipt of payment. These were used for lending and the English Exchequer issued tally sticks as a form of credit.
1215 Magna Carta–restricted the rights of kings to raise taxes without the consent of the barons. From this beginning, Parliament would be established.
1300 Double entry bookkeeping had been created from the records of Giovanni Farolfi & Co. documented a complete double entry bookkeeping system.
1440 Printing press. Johannes Gutenberg invented movable type. Printing presses soon expanded across Europe.
1494 Pacioli’s Summa, codified double entry bookeeping as the “Venice system”. Gutenberg’s printing press helped Summa be printed and spread throughout Europe. The accounting history timeline was now moving towards more widely published standards.
1600 East India Company founded, which had a monopoly over the trading rights for much of Asia, and had much to do with England’s rise in merchant power.
1633-72 Rise of goldsmith-bankers in England. Goldsmiths used their safes for customers that wished to make deposit of coin, jewelry, and other valuables. Goldsmiths gradually became bankers as they stored valuables. Goldsmith notes became commonly used as receipts for reclaiming deposits, or when entering transactions requiring an evidence of ability to pay. In 1660 goldsmith notes became banknotes, which were so widely accepted that they were commonly taken in place of actual coin.
1694 Bank of England founded as a joint stock company. The Bank began to issues notes for deposit, with the promise to pay the bearer the sum (redeemable in gold or coin) of the note on demand. Initially written by hand for specific deposits, these were gradually replaced by printed fixed-denomination notes.
1720 The South Sea Company was founded as a joint stock company, with the focus of trading with Spanish colonies. Stock speculation drove this stock price up ten fold, however resulted in collapse on rumors. Investors lost everything and soon started a recession. Investors lost interest in joint stock companies as a result of the ruin, however also as a result of this, an audit was performed by Charles Snell, who discovered fraud by the company’s directors. Audits were taking new form in society on the accounting timeline, and becoming more valuable.
1770-2 Josiah Wedgwood became the first ever cost accountant. This famous potter decided that, to avoid bankruptcy during a recession, he would study his accounting books, manufacturing cost structure, overhead, and his market structure. The method he devised made him an accounting pioneer.
1773 London Stock Exchange. Large projects such as railroads and utilities needed to accumulate large amounts of capital to be formed, the likes that could only be raised by joint stock companies. The London Stock Exchange began in a coffee shop and eventually had its own building in 1802.
1789 U.S. federal government established, and Alexander Hamilton, the first Treasury Secretary and established the federal accounting system.
1831 Accounting profession gets recognized as a result of the Bankruptcy Act of 1831 in Britain. This allowed accountants to be appointed official Assignees, which was the first government recognition.
1844 Registry of Business Incorporation and required audits. The British Companies Act of 1844 required incorporation of business by formal registration. A requirement was the annual appointment of auditors to examine the accounts and balance sheet of all public companies.
1845 Deloitte founded, the first of the Big Eight (now four). William Deloitte opened his London firm, soon to be followed by Samuel Price and Edwin Waterhouse (1849), William Cooper (1854), and William Peat (1867).
1862 First federal income tax was instituted in America as a result of the Civil War. Office of Internal Revenue (the IRS) was created under the Treasury Department to collect these taxes.
1882 Standard Oil used the trust to conduct the oil business across state lines. John D. Rockefeller became the richest man in America. Rockefeller was trained as a bookkeeper and became one of the most famous entrepreneurs of all time.
1895 First American Big Accounting firm, Haskins & Sells was founded. At the time, they were the Big Eight firms. Haskins & Sells is now part of Deloitte & Touche.
1887 Interstate Commerce Commission Act provided federal regulation of railroads, including a unifrom accounting system.
1890 Creation of the tabulating machine, invented by Herman Hollerith, used punch cards to tally the 1890 U.S. Census. He later founded the Tabulating Machine Co. Under Thomas Watson, Sr. which later became International Business Machines (IBM). This started the history of computerized accounting.
1902 First billion dollar corporation. J. P. Morgan formed U.S. Steel (after buying out Carneigie Steel), this was the first billion dollar American corporation. Price Waterhouse appointed the first auditor of the firm.
1923 Modern cost accounting was developed by Donaldson Brown, Controller, and Chairman Alfred Sloan, of the General Motors company. Major cost accounting techniques created here would be used by big business.
1933 Roosevelt’s New Deal has a large impact on the Accounting Timeline. After elected president, and his First Hundred Days enacted significant legislation on the banking system. The most significant to Accounting History is The Securities Acts of 1933 and 1934 establish the Securities & Exchange Commission (SEC). This organization was charged with regulating financial markets which includes the financial accounting of corporations.
1936-8 As regulation of accounting continued to develop along the accounting timeline, and the Committee on Accounting Procedure (CAP) was created to regulate this, and ; the term “generally accepted accounting principles” (GAAP) was used for the first time. The SEC delegated authority to establish accounting standards to the CAP and began to issue Accounting Research Bulletins (ARBs).
1943 The US federal government began the income tax withholding program, as this was the only way to collect on high tax rates it used to fund World War II. Income taxes became the revenue generator for the expansion of the federal government.
1950 IBM Computers. IBM develops electronic computers to add to their line of business equipment, and the first available for accounting use came about in 1953. This was the next step in the history of computerized accounting.
1953 Computer Accounting. Arthur Andersen utilized computerized accounting in the payroll of a General Electric plant using an early computer, starting the information age for business. The computer revolution became global, and the Big Eight accounting firms discovered a source of expertise they could relay – consulting.
1953 First GAAP Codification. CAP issued ARB 43 which codified all previous pronouncements. The basic concepts of accounting based on historical cost concepts were developed by the CAP and many of the basic procedures of financial accounting were based on the CAP pronouncements.
1959 The Accounting Principles Board (APB) replaced the CAP for issuing accounting standards. It suffered from many of the same weaknesses as the CAP, but issued several important opinions.
1973 Financial Accounting Standards Board (FASB) was formed to solve the weaknesses of the APB. The structure as an independent body (the Financial Accounting Foundation appoints the Board, provides funding and oversight), seven full-time members rather than part-time members that were also on the boards of companies, and dedicated research staff to provide thorough due diligence were its major highlights.
1979 Electronic spreadsheet. Dan Brinklin and Bob Frankston wrote VisiCalc for the Apple II, the first electronic spreadsheet, the most important business application for the PC.