Introduction to Financial Accounting: A Historical Perspective | Bcom

Accounting is as old as money, dating back thousands of years. Its origins can be traced to early civilizations like Mesopotamia, Egypt, Babylonia, and the Indus Valley. In India, Chanakya mentioned accounting practices in his book Arthashastra, which is comparable to modern financial management books.

However, the actual breakthrough in accounting occurred with the introduction of double-entry bookkeeping by the Italian mathematician Luca Pacioli, who is often regarded as the father of accounting and bookkeeping.

Accounting gained significant importance during the Industrial Revolution due to the emergence of large corporations. Notable examples include Du Pont, established in 1802, and General Motors, founded in 1908. The rise of these large companies highlighted the need for more structured accounting practices to manage their growing financial complexities.

Several professional accounting bodies were established during this time to regulate and advance the field of accounting. Key organizations included:

• The Institute of Chartered Accountants of Scotland, formed in 1854.
• The Financial Accounting Standards Board, established in 1939.
• The Institute of Chartered Accountants of India (ICAI), founded in 1949.

To promote international consistency in accounting practices, the International Accounting Standards Committee was formed in 1973.