Accounting is a very old science that historians believe arose when early man begin to accumulate and count his property. The first evidence of accounting was found in the ancient city of Jericho, part of modern-day Israel.
Among some of the oldest ruins in the region, archeologists have unearthed clay artifacts they believe were used as a primitive method to track inventory, such as livestock. Referred to as “tokens,” these artifacts are believed to be as much as 7,000 years old.
Over the next 6,000 years, the art of accounting evolved to keep up with the demands of ever-more complex business structures. Advances contributing to the growth of accounting included writing and the development of monetary currency.
Amatino Manucci
One of the earliest accountants of note is Amatino Manucci, a 13th century Florentine merchant. As record keeper for Giovanni Farolfi and Company, Manucci was one of the first merchants known to have implemented the double-entry journal accounting system.
Although it is believed that other merchants of the time were also developing the concepts of double-entry accounting to keep pace with their complex international trading empires, Manucci’s account books are among the most complete early works available to historians.
Fra Luca Pacioli
Luca Pacioli was a Franciscan monk and mathematician living in Tuscany in the 15th century. His book The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality has earned him a reputation in history as the “father of accounting.”
The book, one of the first ever published by the Guttenberg press, includes a section on double-entry accounting. This work remained influential for hundreds of years, and it represented state-of-the-art accounting methods until the modern-day balance sheet form was developed around 1868.
Josiah Wedgwood
Still known today as a potter, Josiah Wedgwood was also surprisingly influential as an innovator of accounting principles. A leader of the industrial revolution, he had little interest in accounting as his pottery business began to flourish in 18th century Britain.
When the British economy began to falter in 1772, the situation changed. Faced with rapidly decreasing profits, Wedgwood began to review his account books more closely, only to discover a history of embezzlement by his chief clerk. A new clerk was installed and a new era of modern accounting was born.
Wedgwood was one of the first modern industrialists to study the cost structure for his products, taking into account details such as varying wage levels, overhead, and breakage. Through this work he developed a sophisticated new cost analysis system. He looked closely at how costs could be manipulated and the relationship between cost and demand for his products.
William Cooper
William Cooper established his own accounting practice in 1854, becoming a pioneer of the accounting profession. About 50 years earlier, only 11 men in London had listed their profession as “Accomptants,” in an official register of the time. Three of his brothers joined him in the firm in 1861 to form Cooper Brothers & Company.
The firm started by preparing account books and balance sheets for public companies and over the years began to play a bigger role in cases involving bankruptcy and liquidation. Cooper Brothers merged with an American firm in 1956 to become one of the most prominent accounting firms in existence today, Coopers and Lybrand.
These four men each earned a place in history as one of the greatest minds in the chronicles of accounting. Their contributions to the profession are all fascinating reminders of man’s potential to conquer new challenges that evolve with the increasing complexity of our world.
One-Third of the Top 500 CEOs
You don’t have to be a 13th Century Italian to be a noteworthy accountant. While the fundamentals of accounting go back for hundreds (if not thousands) of years, the evolution of business has kept accounting and financial training as one of the most crucial tools to modern business leadership. The skills accountants develop allow them to understand complex business environments and communicate on the health of organizations to stakeholders of all kinds.
A 2008 research report compiling publicly available data on the CEOs of the top 500 companies found that 38% of CEOs have accounting-related undergraduate degrees (9% in Accounting, 13% in Business Administration and 16% in Economics). It also found that 31% of CEOs had experience in the Finance function sometime before becoming CEO. If you plan running a company and being responsible for its financial health you better know how a financial statement works!
Zeshawn is a doctoral student in the Accounting & Management Department at the Harvard Business School. His research uses archival and field methods and covers managerial accounting topics including employee and organizational incentives, cost management and profitability analysis...
