You would think that the field of accounting is not that old. That accounting only goes as far back as this past century. With the growth of diverse businesses and escalation of corporations in the late 19th century and early 20th century it would be reasonable to assume that this is when accounting came about. After all why would there have ever been a reason for accounting before corporations became so plebeian? Well contrary to popular belief accounting has its origins dating all the way back to the late 13th century.
Accounting originates from what is modern day Italy. A Venetian merchant, Luca Pacioli is regarded as the father of accounting. In 1494, Pacioli described the system of double-entry bookkeeping accounting. Pacioli came up with the system of debits and credits in journals and ledgers. This is a practice that is still used today in accounting.
During the height of the Industrial Revolution in the 18th and 19th centuries galvanized the need for cost accounting practices. Cost accounting helped manage and account for raw materials, finished products, inventory, budgets and price-constraints. The development of corporations in the late 19th century brought a new part of accounting. Corporations raised capital by outside sources such as bondholders and shareholders. Corporations caused accounting standards to become more complex and gave rise to the first uniformed accounting test in 1896. This was the first year that CPAs were licensed.
In response to the Great Depression, the Securities and Exchanges Commission (SEC) was created in 1934. The SEC required all publically traded companies to generate periodic reports prepared by CPAs with the SEC. Several large accounting scandals such as Enron in the late 1990s and early 2000s became catalysts for stricter accounting standards. In 2002 the Sarbanes-Oxley Act (SOX) was passed. SOX required stricter reporting and auditing standards for publically traded companies.
Accounting has come a long way since its beginnings in 1494. With the continual rise and changes of new corporations, markets, and businesses accounting will continue to grow and be a viable field for years to come.