Accounting & Evolution of Accounting

✏ Accounting & Evolution of Accounting:

Accounting is an information system for measuring, processing, and communicating

information that is useful in making economic decisions. Accounting provides the

techniques for gathering and communicating economic data to different individuals and

institutions. The "basic raw materials" of accounting are composed of business

transaction data. Its "primary finished products" are composed of various summaries,

analyses, and reports. Sound decisions, based on reliable information, play an important

role in our economic and social system.

Accounting has been defined broadly as; "the process of identifying, measuring and

communicating economic information to permit informed judgments and decisions by

users of the business information"

As Muslims, it is our faith that the Holy Quran is a comprehensive code of life and is a

source of guidance to us in the conduct of all our worldly affairs. It meets the challenge of

changing times.

The Holy Quran lays great stress on "Kitabat" (recording in black and white), particularly

writing down financial and business transactions. The contents of Verses 282 and 283

of Sura Al-Baqarah, inter-alia stipulates that: -

👉 Whenever you enter into a transaction involving mutual indebtedness for a specified

period, you should keep a written record of the same. The business transactions,

however large or small, must be committed to writing for the period involved.

Moreover, the following main ethical requirements are laid down in these verses:

👉 It is enjoined that the writer or the bookkeeper should record the transactions

properly without any omissions or additions of his own.

👉 He should not decline to put down in writing any of the transactions.

👉 The transacting parties should not influence or compel the writer to deviate from

proper recording of the facts.

Most of the fields of human activity came into existence in response to the social and

economic needs of the society. Accounting is no exception. Throughout human history,

people in all civilizations have maintained various types of records of business

activities. As business and society have become more complex over the years,

accounting has developed new concepts and techniques to meet the ever-increasing need

for financial information.

The accounting function is as old as the need to exchange things of value and keep track

of the wealth. In Babylon, some 3600 years BC ago clay tables were used to record the

payment of wages. There is numerous of evidence of record-keeping and accounting

practices in ancient Egypt and Greek city-states. During that primitive period, accounting

was used only for dealing with limited aspects of the financial operations of private or

government enterprises. There was no systematic accounting embracing all transactions

of a particular unit. It was used only for specific types or portions of transactions. The

first published work describing the double-entry system of accounting was written by

Luca Pacioli in 1494 in Venice.