Why Ancient Civilizations In History Developed an Accounting System

History of Accounting > Development of Ancient Accounting Systems

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

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 could 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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