EVOLUTION OF ACCOUNTING 1. Why accounting is necessary.—The exchange of something in the possession of one individual for some thing belonging to another, made its appearance early in the life of the race and was responsible, in all probability, for the invention of some method of keep ing a record of these exchanges. Frequently such ex changes or barters, as they were called, required more than the mere handing over of one article in exchange for another. When an adjustment was required, be cause of differences in valuations, a calculation be came necessary to complete the exchange to the sat isfaction of both parties. This was especially true when the entire exchange was not consummated at one time. If, for example, one person promised to give up something a month hence in exchange for something else to be received at once, a record of his promise was necessary.
In its etymological sense accounting means "count ing too" and this was the sense in which it was first used. The term as it is now understood is difficult to define because it includes within its meaning the re sults of a long process of growth.
2. Customs of ancient history is silent regarding the origin of accounting, we are safe in assuming that it had its inception at a very early period, and this is evident in the relics of the earliest civilizations. Among the ruins of ancient Babylon there have been found a large number of tablets, many of them as old as 2500 B. c. in which complete records of various commercial transactions of those times are recorded.
It is supposed that the Phoenicians evolved the al phabet to aid them in expressing the results of their business transactions and thus were able to avoid being cheated. The Romans and had also highly developed systems of record keeping. Among these people both private and public enterprises made use of accounting or recording as a means of keeping track of their affairs.
In medieval times we find traces of an accounting system in England as early as the twelfth century.
There, the public officers collected feudal dues and paid the expenses of government. Twice a year each public official who was responsible for monetary trans actions met a board to whom he reported the amount of funds that he had collected and accounted for their disposition, the difference between his receipts and disbursements being checked by the funds still in hand. In so reporting and showing supporting evi dence the public officer was said to "account" for his stewardship, and the board who received and criticised his report was called a "board of auditors" or hearers.
Thus "accounting" consisted in reporting on the conduct of one's trust or stewardship, and "auditing" in listening to and approving or disapproving the re port. We shall see later that auditing today, is founded on the same principle as it was in medieval times.
3. Features of these ancient systems.—The main idea behind all these ancient systems was that of keep ing a record of what had transpired. Disagreements were bound to arise when memory only was relied upon for subsequent reference. Thus, in England, the chancellor of the exchequer kept the accounts for the crown; each sheriff was required to appear twice a year before him, render a report and pay all rev enues collected. In receipt, the sheriff received a "tally" consisting of a piece of wood on which notches were cut to represent the amount of pounds, shillings and pence that he had paid into the treasury. The tally was then split lengthwise into two parts, each part similarly notched, one half remaining with the chancellor of the exchequer and the other given to the sheriff. The presentation by the sheriff of the half "tally" which matched that in the possession of the chancellor of the exchequer was evidence of what had already been paid, and the payment by the sheriff of the balance on hand indicated the end of the trans action, that is, the closing of the account.