How Humans Invented Accounting

Last Updated On -07 Aug 2025

Table of Contents

What Was the Purpose of Keeping Written Records?
Ancient Methods of Keeping Written Records
The Dawn of Record Keeping
The Mesopotamian Account Summary
The Renaissance Era of Accounting
The Industrial Age of Accounting

When humans first encountered the need for a wheel and an axe, inventing a thing such as accounting must have seemed far-fetched. So, how and why did humans invent accounting? Believe or not, it dates back more than 7,000 years, after the expansion of commerce and business. The need for accounting grew with the development of writing, counting, and money. Let us hop on the evolution of the accounting journey from simple tally marks on the bone to the present digital age.

What Was the Purpose of Keeping Written Records?

The early humans focused primarily on survival during their hunter-gatherer lifestyle. Keeping records of the following became necessary as communities, trades, and agriculture developed:

Account of procurement and stock of food and harvests.
Ownership of land and property.
Count of livestock.
Debts and taxes due.
Trade of goods.

Ownership, goods, and obligations began to take a more organized and structured form with the rise of agriculture and commerce. Memory alone was no longer sufficient to keep track of obligations.

Ancient Methods of Keeping Written Records

1. Tally Sticks

Tally sticks were primitive wooden sticks with notches cut on them to represent numbers. Used to keep track of debts, trades, and livestock, they were a form of prehistoric writing.

2. Clay Tokens (Mesopotamia)

The Sumerians of Mesopotamia started using tokens to represent units of goods as early as 8000 BCE. These tokens eventually transformed into cuneiform writing pressed into clay tablets.

3. Quipu (Inca Empire)

In the Inca Empire, quipu was a complex knot system consisting of strings and knots, that was used to store information of a numerical and sometimes narrative character used primarily for trade and census.

4. Papyrus Scrolls (Egypt)

The Egyptians started recording their history, taxes, and inventories using hieroglyphs and papyrus.

5. Oracle Bones (China)

In ancient China, the practice of inscribing on bones and tortoise shells served a dual purpose of divination and maintaining a record of dynastic events, an early attempt at the political and historical record-keeping.

The Birth of Accounting Principles

Accounting as a practice emerged much earlier than the modern world would assume. The first known accounting records were found in Mesopotamia and date back to 3,300 BCE. They recorded transactions involving grain, cattle, and silver. These early systems eventually gave rise to double-entry bookkeeping, formalized by Luca Pacioli in the 15th century.

The Dawn of Record-Keeping

The accounting records were found in the ruins of ancient Babylon, Assyria, and Sumer. There is evidence of early record-keeping between the 2nd and 4th millennia BC, where the priests and leaders used bookkeeping on clay tablets to oversee the financial matters of the temple. By the advent of the Roman Empire, the records of cash, commodities, and transactions were tallied and documented. Administrative subdivisions were created to account for the production of crops, payments made to the workforce, and the day-to-day running of the estate, which was summarized every year on a papyrus scroll.

The Mesopotamian Account Summary

The Sumerians created the first actual accounting system in Mesopotamia, now modern Iraq. The use of cuneiform scripts to record transactions, debts, and temple assets was encouraged.

All the transactions were recorded in pictographs and symbols. The Mesopotamians established the groundwork for the accounting systems in Egypt, Greece, and Rome. The modern bookkeeping practices were inherited from their record books. The complete records of trade and commerce were tracked essentially by the records.

The Renaissance Era of Accounting

Luca Pacioli published a book in Italian vernacular that the local merchants could understand well. The book contained the records of not only accounting but also the Hindu-Arabic numerals, new developments in mathematics, and the double-entry system. The book introduced “credre” and "debere,” which later became credit and debit. Luca’s book “Summa de Arithmetica" was first published in Venice in 1494 and was all about accounting. Merchants used the book as a reference text. Pacioli mentioned plus and minus symbols for the first time in a book.

The Industrial-age of Accounting

Since about 1600, joint-stock companies have been built with the need for an organized financial system. After the 18th and 19th centuries, standardized accounting practices were on the rise. By the 21st century, professional bodies like IFRS and AICPA introduced formal financial reporting. We are now witnessing the digital age of accounting, with AI integration and blockchain technology revolutionizing the field.

Frequently Asked Questions (FAQs)

How did accounting begin?

Mesopotamia introduced actual accounting in 3000 BCE to track the records of transactions related to trade, taxation, and management.

Who is the father of accounting?

Luca Pacioili was the father of accounting because he introduced double-entry bookkeeping, and his publication mentioned mathematics symbols and applications.