Great Events in Accounting & Business History

8000 BCThe birth of civilization: fortified cities. Ancient Jericho was founded about 8,000 years ago. Salt was mined and available for trade near this Dead Sea site. There is no evidence of intensive agriculture at this date (much of their food must have been imported), suggesting that the city was founded primarily as a trading center.
7500 BCAgriculture and tokens--the first accounting records. The domestication of livestock and grains started at different sites about the same time. Simple tokens were associated with agricultural sites, clay balls of various shapes (round, oval, etc.) representing specific goods (e.g, 2 round tokens could be a pair of cattle, 12 oval tokes a dozen units of wheat). This was the first representation of inventory and the beginning of the concept of numbers.
3200 BCWriting. Over the next 5,000 years, accounting records advanced from simple to complex tokens representing inventory, to clay tablets, to the development of abstract symbols and cuneiform writing in Sumeria. This paralleled advances in agriculture, pottery and textiles, building, war and nation-states.
3000 BCBronze, abacus, & papyrus. Bronze was first used to make tools in the Middle East, the start of the Bronze Age. The abacus was invented in China and later made its way west. Papyrus scrolls were found in Egyptian graves.
2200 BCThe Code of Hammurabi. One of the earliest law codes, which standardized weights and measures, commercial transactions and contracts, and criminal penalties. Payments were based on fixed amounts of silver or grain. About this time metal became used as a medium of exchange in the Middle East.
7th Century
Coins invented in Lydia. It started with crude slugs of electrum (a gold and silver alloy) of a standard weight. Later coins were stamped, first with simple lines and then with more complicated designs.
5th Century
The development of Greek banking. By 575 BC Athens started to mint coins. Financial transactions were made only in coined money. Money changing was the most common financial activity. Bankers accepted deposits and made loans.
By 50 BCRoman republic. Rome developed as a republic, ruled largely by the Senate. With the rise of a professional army, Rome successfully conquered neighbors and then much of the Mediterranean world and Europe. Rome was known for engineering marvels that included roads, acquiducts, and buildings. Rome adopted coinage, the abacus, Greek alphabet, "Roman numerals", writing on papyrus, banking & credit. The corporation was established in Rome as an entity that could own property, make contracts, and engage in many activities.
1 ADRoman empire. With the rise of Julius Caesar, the republic was replaced by the empire. At the start of the new era, the age of Augustus was the Pax Romana, an era of peace and prosperity--one definition of the Golden Age of Rome. Augustus reformed the money and tax systems. Taxes included general sales tax, a land tax, and a flat-rate poll or head tax.
410Fall of Rome. Rome was sacked by the Visigoths, the Dark Ages began in the West. Local areas became self sufficient and the feudal system developed. Roman rule in the East continued at Constantinople for another thousand years.
1095-1270Crusades--with western armies attempting to conquer the Holy Land. Vast sums of money were needed to finance the armies, stimulating banking in Europe and encouraging trade with the exotic east. Italian city states prosper.
from 1000Italian merchants extend trade from England to the Far East and improve bookkeeping. The most successful merchants developed complex trading networks across Europe and the Mediterranean, often using partnerships. Bills of exchange and clearing houses were established in major European trading centers.
1066Battle of Hastings. William of Normandy conquered England. In 1086 the Domesday Book surveyed the wealth of the kingdom to determine taxes and England's fiscal system. England's legal system and government evolve from Normal rule.
1100Piscan Document--demonstrated systematic but primative bookkeeping by Italian merchants.
1160-1200Tally sticks. Tallies evolved into credit instruments in England. Tallies were wooden sticks, notched to represent specific sums of money. The sticks would be split in two to serve as a receipt. These would be used for lending and the English Exchequer issued tally sticks as a form of credit.
1215Magna Carta--restricted the rights of kings to raise taxes without the consent of the barons. From this beginning, Parliament would be established.
By 1300Double entry bookkeeping. Accounting records of Giovanni Farolfi & Co. documented a complete double entry bookeeping system in place.
1440Printing press. Gutenberg invented movable type. Printing presses soon expanded across Europe.
1494Pacioli's Summa--codified double entry bookeeping as the "Venice system". Thanks to Gutenberg's printing press, Summa was printed and spread throughout Europe.
1550First English joint stock company. The Russia Company was chartered to search for the North-east passage to Asia.
1600East India Company founded. Company had monopoly trading rights for much of Asia. Thomas Stevens was the first accountant for the company. This successful company had much to do with the rise of England as a mercantile power.
1633-72Rise of goldsmith-bankers in England. Goldsmiths used their safes for deposits of coins and other valuables and gradually became bankers. Beginning in 1633 goldsmith notes were used as receipts for reclaiming deposits and evidence of ability to pay. By 1660 goldsmith notes became banknotes, accepted in place of coin.
1694Bank of England founded as a joint stock company. The Bank began to issues notes for deposit, with the promise to pay the bearer the sum (redeemable in gold or coin) of the note on demand. Initially written by hand for specific deposits, these were gradually replaced by printed fixed-denomination notes.
1704Promissory Note Act--confirmed the legality of goldsmiths' notes as negotiable.
1709Abraham Darby set up his iron works at Coalbrookdale. The smelting of iron with coke at the Ironbridge site was a significant step in the Industrial Revolution. This Ironbridge iron smelting site became the largest in the world and attracted many other manufacturing businesses.
1720The South Sea Bubble Collapses. The South Sea Company was founded as a joint stock company in 1711 to trade with Spanish colonies. Speculation drove the stock price up ten fold, only to collapse on rumors of financial disaster. Investors were ruined, a recession started, and investors lost interest in joint stock companies. An audit was performed by Charles Snell, who discovered fraud by the company's directors.
1733John Kay's flying shuttle. Wool and then cotton cloth initially used the domestic system. Mechanization meant replacing hand made textiles with the factory system. One of the first inventions was Kay's flying shuttle for spinning cotton thread. James Hargreaves inproved this with his spinning jenny in the 1760s.
1762Barings Bank founded--Britain's oldest merchant bank.
1769Steam Engine operational. The first steam engine came from Holland in the 17th century. Thomas Newcomen improved the engine to use as drainage pumps in coal mines. James Watt patented his improved steam engine in 1769. Watt's rotary-motion steam engine was put on the market by Boulton & Watts in 1782. Steam engines were ordered by textile factories, iron and steel manufacturers and other businesses.
1770-2Josiah Wedgwood became a cost accountant. The famous potter set up his first plant in 1754. To avoid bankruptcy during a recession, Wedgwood studied his books, manufacturing cost structure, overhead, and his market structure. He became an accounting pioneer and the firm survived to the present day.
1771Factory. Richard Arkwright patented the water frame in 1769, which used water power to spin yarn. Arkwright built an early cotton factory in Britain. Most cotton manufacturing used the factory system by 1800.
1773London Stock Exchange. Canals, railroads and other utilities needed vast capital that could only be raised by joint stock companies. Meetings at Jonathan's Coffeehouse were used by stockbrokers for capital market transactions, which became known as the Stock Exchange Coffeehouse. The London Stock Exchange had its own building in 1802.
1789U.S. federal government established. Revolution was won, constitution ratified, George Washington elected first president, Congress met in New York, Alexander Hamilton first Treasury Secretary and established the federal accounting system.
1789First American factory. Samuel Slater built the first mechanical spinning mill in the U.S.
1802Trevithick's locomotive. Richard Trevithick produced a high-pressure engine that he adapted into a railroad locomotive. George Stephenson built his first locomotive in 1814.
1814First integrated textile mill in the U.S. Francis Lowell built the first integrated textile mill in America.
1825Stockton & Darlington Railroad, the first commercial railroad. This railroad used Stephenson's locomotive.
1827First American commercial railroad. The Baltimore & Ohio railroad received a charter from the state of Maryland. Although it would take 25 years to reach the Ohio River, the B&O starts using locomotives about 1830.
1831Accounting profession gets recognized. The Bankruptcy Act of 1831 in Britain allowed accountants to be appointed "official Assignees", the first government recongition.
1844Incorporation of business by registration. The British Companies Act of 1844 established the incorporation of business by formal registration and required the annual appointment of auditors to examine the accounts and balance sheet of all public companies.
1845Deloitte founded, the first of the Big Eight (now five). William Deloitte opened his London firm, soon to be followed by Samuel Price and Edwin Waterhouse (1849), William Cooper (1854), and William Peat (1867).
1862First federal income tax. With the Civil War raging, sweeping new taxes were passed including an income tax; Office of Internal Revenue established under the Treasury Department.
1882Standard Oil invest the trust. Standard Oil used the trust to conduct the oil business across state lines. John D. Rockefeller became the richest man in America. Rockefeller was trained as a bookkeeper and became an exceptional entrepreneur.
1895First American Big Five. Haskins & Sells founded, the first American Big Eight (now Five) firm (now part of Deloitte & Touche).
1887Interstate Commerce Commission Act provided federal regulation of railroads, including a unifrom accounting system. Given the interstate (and global) nature of business, states had been unable to effectively regulate railraods and other businesses, requiring federal intervention.
1890First Antitrust Act. The Sherman Antitrust Act was established to eliminate preditory price fixing, monopoly pricing, and other antitrust practices. Presidents Roosevelt and Taft used antitrust laws to successfully sue major monopolies including Standard Oil early in the 20th century.
1890Tabulating machine. Herman Hollerith invented the punch card tabulating machine to tally the 1890 U.S. Census and later founded the Tabulating Machine Co. Under Thomas Watson, Sr. this firm became International Business Machines (IBM).
1902First billion dollar corporation. J. P. Morgan formed U.S. Steel (after buying out Carneigie Steel), the first billion dollar American corporation. Price Waterhouse appointed the first auditor of the firm.
1914Fedeal Reserve created as the nation's central bank. Clayton Act established the Federal Trade Commission and strengthened anti-trust laws.
1923Modern cost accounting. Under Controller Donaldson Brown and Chairman Alfred Sloan, General Motors adopted or developed the major cost accounting techniques that would be used by big business for the next half century and beyond. These included return on investment, return on equity calcluations and flexible budgeting.
1929Great Depression. The stock market crash lead to the Great Depression. The result was federal regulation and assistance to save capitalism. However, the depression didn't end until America's entry in World War II.
1933Roosevelt's New Deal. FDR is elected president and his First Hundred Days are known for significant legislation to salvage the banking system, put people to work, and dozens of federal programs. The Securities Acts of 1933 and 1934 establish the Securities & Exchange Commission (SEC) to regulate financial markets, including financial accounting. The basic structure of the New Deal (e.g., Social Security, banking insurance, securities regulations) was continued and expanded throughout the century.
1936-8Regulation of financial accounting. The Committee on Accounting Procedure (CAP) created; the term "generally accepted accounting priciples" (GAAP) used for the first time; the SEC in Accounting Series Release No. 4 delegated authority to establish accounting standards to the private sector; the CAP assumed this authority and began to issue Accounting Research Bulletins (ARBs).
1941U.S. entered World War II. American became a super power and the leader of the free world after a brutal four year war. The post war structures (e.g., United Nations, World Trafe Organization) and the confrontation with the Soviet Union resulted in a 50 year Cold War.
1943Income Tax withholding. Congress passed income tax withholding as the only way to collect on high tax rates to fund World War II. Tax rates would go up and down, but income taxes became the revenue generator for the expansion of the federal government.
1943-6First Computer. Electronic Numerican Integrator & Computer (ENIAC) developed by Presper Eckert and John Mauchly at the University of Pennsylvania, the first computer with electronic circuits. Eckert & Mauchly later create the Universal Automatic Computer (UNIVAC), but sold their company to Remington Rand.
1950IBM Computers. IBM begins to develop electronic computers to add to their line of business equipment; the IBM 702 became available for accounting use in 1953.
1953Computer Accounting. Arthur Andersen computerized the payroll of a General Electric plant using a UNIVAC I, starting the information age for business. The computer revolution became global and the Big Eight discovered a source of expertise primarily for consulting.
1953First GAAP Codification. CAP issued ARB 43 which codified all previous pronouncements. The basic concepts of accounting based on historical cost concepts were developed by the CAP and many of the basic procedures of financial accounting were based on the CAP pronouncements.
1959APB formed. The Accounting Principles Board (APB) replaced the CAP for issuing accounting standards. It suffered from many of the same weaknesses as the CAP, but issued several important opinions.
1973FASB formed. Based on the recommendation of the Wheat Commission, the Financial Accounting Standards Board (FASB) was formed to solve the weaknesses of the APB. It was established as an independent body (the Financial Accounting Foundation appoints the Board, provides funding and oversight), seven full-time members, a research staff, and thorough due process. To date, the FASB has issued about 140 pronouncements.
1976First successful PC. Steve Wozniak and Steve Jobs built the first Apple computer; the Apple II is introduced two years later, the first successful personal computer.
1979Electronic spreadsheet. Dan Brinklin and Bob Frankston wrote VisiCalc for the Apple II, the first electronic spreadsheet, the most important business application for the PC
1981IBM PCs. The IBM PC emerged, getting hardware and software from other suppliers, establishing a de facto industry standard. IBM was a major force for only a few years, before the success of "IBM clones" such as Compaq.


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