- Modern accounting, or the double-entry accounting method, was first documented in the early 1300s. Double-entry accounting was first documented by a company named Giovanni Farolfi & Co about 1300. The double entry system is still in use some 700 years later. Luca Pacioli, the father of accounting, wrote the first book on double-entry accounting in 1494.
- Accounting changed little during the next several centuries. From 1769 to 1772, during the depression that gripped the European continent, cost accounting was developed to help companies streamline their operation and stay open. The U.S. Revolution ended in 1789 and brought about the first U.S. governing administration. Alexander Hamilton, the first Treasury Secretary, established the U.S. Treasury Department and the federal accounting system. Although there was not a national income tax yet, the government collected revenue from trade and export taxes.
- The accounting profession was recognized as a legitimate profession 1831 by the United Kingdom's Bankruptcy Court. The court ordered that certain accountants be appointed as assignees to assist the court with financial records. The U.S. Civil War broke out in the year 1861, and a new national income tax was introduced. Tax accounting has never been the same. It has continued to grow in complexity, requiring an army of tax planners, tax preparers and tax accountants.
- In 1868, the modern balance sheet was created, in the form that we use today. The income statement would not be created until just prior to World War II. The first large U.S. accounting firm Haskins & Sells begin in 1895. Today, it is a part of the big four firm Deloitte and Touché. The accounting profession exploded around 1900 with hundreds of accounting firms springing up across the United States.
- Modern cost accounting was refined and developed in 1923 by the accounting department of General Motors. The new cost accounting theories and practices were established to keep the company solvent and streamline the manufacturing operations. The return on investment, return on equity and flexible budgeting calculations were created and adopted.
- Financial accounting regulation was introduced between 1936-8 with the formation of the Committee on Accounting (CAP). CAP created the "generally accepted accounting principals" or GAAP. We still use GAAP today. This set the bar for all accounting activity in the United States.
- GAAP was codified, or rewritten, in 1953. However, in 1959, the CAP was replaced by the Accounting Principals Board (APB). This organization was short-lived and suffered from many of the same weaknesses that plagued the CAP. It did however issue several pronouncements. In 1973, the Financial Accounting Standards Board (FASB) was created and remains today. Since its creation, it has issued some 168 pronouncements. FASB has the authority and garners the respect that the CAP and APB never received. In 2009, there is a trend to move from GAAP to the International Financial Reporting Standards (IFRS). Accounting, although slightly more complicated, remains mostly the same as it was 800 years ago.
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