Although there is no compelling evidence, the very first Homo sapiens that lived on earth, must have traded with their neighbors. If one tribe had an especially good day of hunting, they more than likely offered some of their catch to the group that resided in a cave close by in exchange for something that they valued. This was the start of the free enterprise system that we utilize today.
Later, as mankind began to evolve and grow more intelligent, they learned how to domesticate wild animals and to cultivate the plants that they were consuming to help them to survive. These developments eventually lead to the formation of fixed settlements, which soon became small villages and towns.
Some of these villages began to prosper, because their inhabitants were better farmers or ranchers than their neighbors. As they flourished, they accumulated more grain and livestock than they required to stay alive. Certain individuals in each community were able to amass great amounts of these highly valued commodities, and they needed a way to ensure that accurate records of what they owned were maintained.
This was essentially the start of the civilization that we recognize today, that has currencies, private property rights, systems for commerce, and accounting systems. An ancient called Jericho, which is located close to the Jordan River, is the place that where one of the first accounting systems was created. The city has been inhabited for over 11,000 years, and it is thought that somewhere around 7,500 B.C. they developed a barter system to facilitate trade. At that time a farmer would be issued a token, in the form of a clay ball, for their grain inventory. These tokens would later become a form of currency, which represented an asset on a balance sheet of the owner of the token, and a liability on the balance sheet for the holder of the grain.
The issuer of the tokens, needed to know how much excess grain that they possessed, over the value of the tokens that they distributed. They required this information in order to trade that surplus stock, for goods, services, or labor that they required. At the time, this society possessed a mathematical system, but no way to fully account for everything that they owned. Because of this, they developed an accounting system that supplied them this information. As with everything in life, mother is the necessity of invention, and our accounting system is no different. In this instance, it was created to accurately calculate assets and liabilities, which would later be translated into wealth.
If you think about it, that is exactly what today’s accounting systems do. Of course, as the years past, and the transactions have become more complicated, so have the accounting systems that we use in an attempt to accurately record what is transpiring. Ancient civilizations basically had the same requirements that a business today would have, but no way of meeting their needs. Because of this, they developed the first accounting system, which still benefits us greatly in our present society.
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