Frs5 Accounting Standards

Frs5 Accounting Standards

Frs5 Accounting Standards

The earliest recorded forms of Accounting date back over ten thousand years to stone counters in the Middle East. Bookkeepers in modern day Iraq made impressions in clay tablets to create permanent records of documented wealth.

Luca Pacioli’s Summa - the Development of Formal Accounting

In 1494, Accounting became formalized when a Franciscan Friar named Luca Pacioli published "Summa de Arithmetica, Geometria, Proportioni et Proportionalita," which can be translated as ‘Everything about Arithmetic, Geometry, Proportion and Proportionality.’ In his book, Pacioli described a bookkeeping method utilized by Italian merchants in Venice during the Renaissance. The merchants had created a system whereby credits and debits worked together in a balancing framework; a concept known as double-entry accounting.

Pacioli also documented the application of journals and ledgers, which included assets, liabilities, capital, income, and expense accounts. Furthermore, he laid out year-end closing entries and introduced the idea of a trial balance. The Summa additionally discussed ethics and cost accounting.

This exhaustive analysis of Accounting technique caused Pacioli to be hailed as the Father of Accounting. The basic concepts outlined in the Summa are still in use today. Accounting as a whole remained unchanged for centuries after the publication of Pacioli’s book; however, the advent of the Industrial Revolution during the 19th century changed the role of Accounting in business.

Accounting Regulation & Oversight in the United States

The expansion of business led to a rise in the visibility and prominence of the Accounting profession, as services beyond bookkeeping were now required. This highlighted the need for consistency and transparency in the profession’s practices and among its professionals. In 1887, the American Association of Public Accountants (AAPA) was formed. The AAPA set up the standardized CPA test in 1897. In 1916, the AAPA was succeeded by the Institute of Public Accountants. The name was changed to the American Institute of Accountants in 1917, and to the American Institute of Certified Public Accountants (AICPA) in 1957. The American Society of Certified Public Accountants was formed in 1921 and acted as a federation of state societies. The Society was merged into the Institute in 1936.

The 1929 Stock Market Crash gave rise to the Great Depression of the 1930s, which in turn led to the passing of the Securities Act of 1933 and the Securities Exchange Act of 1934. Out of these, the Securities and Exchange Commission (SEC) was established to oversee the financial practices of companies and the activities of Accounting Firms.


Posted by Admin on December 23, 2011 - 9:34 pm Posted in basic accounting concept
  • Frs5 Accounting Standards

    Frs5 Accounting Standards

    Frs5 Accounting Standards

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