Definition of Accounting, Bookkeeping

History of accounting

Ancient time

According to some assumptions, the first records of economic processes already appeared in Mesopotamia during the Ubaid culture (a prehistoric culture in Southern Mesopotamia, that is, Sumer – present-day southern Iraq). About 3500 BC, the Sumerians were already accounting for the annual amount of bread (grain) and beer, and they were recorded on the clay tablets by their own cuneiform writing. A further development was the introduction of the terms “owed” and “demanded” in Egypt and Babylonia around 3000 BC, which archaeologists discovered on old papyrus rolls. In the second century after Christ, there were prepared palm leaves in India that retain evidence of the first postcard accounting. Ancient Greek records from the fifth century BC tell of a logistic officer who was responsible for drawing up the final accounts of the Treasury of the Attic and paying the tithe to the goddess Athena Pallas.


Middle Ages

In 795, King Charles the Great issued a decree on royal estates and imperial estates, requiring a summary report at the end of the year, which was a well-structured statement of assets. For this purpose the Royal Chancellery used the form already used by the Church. The first trade document to the north of the Alps comes from the headquarters of the Hanseatic League, Lübeck, where a postal trader recorded 160 economic events on a parchment roll in 1180 in simple form. The establishment of a current account system (recording of receivables and liabilities vis-à-vis each economic partner) has led to further progress in European accounting with Greek and Latin cultures. In 1263, in Genoa, two city “main account keepers” first used the Latin “ratio” for each account. The Arabic decimal system became known in Europe in the early 13th century. Nevertheless, the Roman numeral system, believed to be unadulterated, was still used until the end of the 15th century.

The earliest demonstrable example of complete double-entry bookkeeping is from 1340. From this time on, genealogical books of the head of state revenue and expenditure remain. There is also a pattern in the books. It includes tax receivables, loans and penalties, which clearly points to the existence of double-entry bookkeeping. Also in Lübeck in 1340, based on the Genoa, Venetian, and Florence patterns, double contingency was introduced along with a balance sheet chart.

Since 1426, commodity invoices have been used to name both inventory and sales invoices. The written history of accounting began in the second half of the 15th century, when trader Benedetto Cotrugli first described the process of double bookkeeping in Libro’s Dell’arte di mercatura. Yet it is only in 1494 that the book of the Venetian monk by Luca Pacioli can be considered the first uniformly descriptive, concise, double-book book. Summa de Arithmetica, Geometry, Proportioni et Proportionalita was not yet a double book on accounting, but in the chapter “The Venetian Method” it summarized everything that is still valid today.


New Age

As early as 1511, the Fugger family completed the first balance sheet. XVI. In the 19th century, Matthäus Schwarz, a chief accountant in Venice, contrasted his accounting with the Fugger balance sheet in Augsburg. He divided the general ledger into two parts, the “people’s ledger” or alias “debt book” and the “object book” or alias Capus. In addition, he produced a “cost booklet” on expenses, consumption tax, etc. and a “secret book” of major events, which included, in addition to the internal calculation of direct taxes, primarily profit and loss accounts.

XVI. During the twentieth century, further developments in accounting emerged in Italy, Germany, the Netherlands, France and England. These included a description of the “credit items” (corporate assets), the “debt items” (liabilities) and the draft revenue. In 1592 the first noteworthy accounting book, the mathematician by Sartorius, was published.

Constantly growing trade in goods gradually improved the XVII. century periodic accounting (business year or calendar year) with regular closure. At that time they started to use goods inbound – outbound and cashbooks, logbooks, etc. Investment accounts and company accounts were only created at the beginning of the first industrial development. XIX. Since the end of the twentieth century, both the insights of commercial and business economics and the requirement of legislation have developed accounting towards financial and managerial accounting.

Accounting has also been developed step by step by the legislature. First, the Prussian law of “General Law” (1794) provides for compulsory balance sheet preparation: “A merchant who either does not keep a proper bookkeeping account or fails to draw up a compulsory balance sheet at least once a year and thus does not know his situation in the event of insolvency as a careless banker is punished. ”

Following the surge in the number of public limited companies, commercial law – in Germany the law on shares – also created new regulations. The principle of balance sheet preparation was legally regulated and threatened with punishment. The entire merchant community was required to make proper balance sheets. For example, the Prussian Income Tax Act (1891) attached the tax return to the trade balance.



Accounting is constantly responding to changes in information needs. Books have been guided for a long time with meticulous accuracy, with manual completion. Transcription procedures saved a lot of time and work, as invoice entry could be copied from the log. To do this, the books had to be divided into sheets, which of course meant a revolution for the traditional accountant. Another improvement was that the transcription procedures were automated. First, the use of typewriters, then the appearance of the automatic accounting machine – which was manual-mechanical – and later the electromechanical transmission gave a boost to accounting. Today, we are at the next stage of technical development, where accounting can be combined with electronic data processing. Today, there are many more or less user-friendly accounting programs. However, despite the great technical advances that have led to the use of pen and paper for computer networks, the cost of accounting is not a significant factor in accounting for individual firms.

Accounting principles

  • Business continuity principle = It can also be considered as a zero principle as it is a prerequisite for the application of other principles. Effectiveness means that in accounting and reporting, it is assumed that no winding-up or significant loss of activity is expected within the foreseeable future. If applied, the primary purpose of the financial statements is to determine the profit or loss for the financial year. If not, the primary purpose of the report is to determine the assets of the business.
  • Principle of completeness = All economic events for which the effect on the enterprise’s assets or results is required by the Accounting Act to be recorded.
  • Principle of Reality = Accounting data must be verifiable, verifiable and verifiable by (qualified) outsiders
  • Principle of clarity = the accounting and reporting format should be clear, understandable and orderly
  • Consistency = the method and form of accounting should ensure consistency and comparability
  • Continuity principle = consecutive business year figures must follow each other
  • Principle of reconciliation = income and expenses for a period are recognized in the same period irrespective of the date of financial settlement (ie payment)
  • Caution Principle = Uncertain revenue should not be reported, uncertain expense is required or probable (subject to certain conditions)
  • Gross Accounting Principle = (except in some special cases) income and expense, and receivables and liabilities should not be offset (netting, that is, only their difference)
  • Individual valuation principle = (except in some special cases) assets and liabilities should be valued individually
  • Principle of accruals = the effects of multiannual economic events should be accounted for as appropriate periods
  • Content takes precedence over form = in accounting it is not the label (title) of the economic event that matters, but its substance
  • Materiality principle = Information that influences the decision of the person using the data should be considered material
  • Cost-benefit principle = proportionality between the usefulness of information and the cost of producing it


Based on the above, we offer our accounting services across on all continents.


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Symfalogic Corporation