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Accounting Allah shmoop When did the bean counters start counting

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their beans Welcome to the briefest history of accounting lesson

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you will ever digest At least hear from up The

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history of accounting won't help you With the day to

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day counting in presenting of beans it'll set you up

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to recognize patterns of failure and success When stumbling through

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the myriad pieces of data you have to codify organize

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and put into a neat little columns while praying to

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the God of O C D Well the earliest examples

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of accounting are well a little hazy because people were

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buying and selling stuff a way back in ancient civilizations

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like remember the Silk Road Yeah that think they had

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to develop ways to keep track of their money in

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money out right Well while some early accounting records have

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been unearth there's not a lot of clarity on the

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precise workings of these systems Suffice it to say that

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the ancient Mesopotamians Egyptians and Babylonian all got their accounting

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on in one form or another But while no one's

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sure exactly when accounting God its humble beginnings well there

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are records that were left behind by a man named

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Luka Patchouli Italian If you couldn't guess who in fourteen

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ninety four described the accounting system used by Venetian merchants

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or by you know merchants of Venice for all you

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Shakespeare nuts out there He described the introduction of a

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double entry bookkeeping system that the merchants used to track

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all their income and the outcome Double entry Yeah set

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of columns like this where Deb It's happened on one

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side and withdrawal of ten grand in cash there too

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Then by ten grand in inventory which happens as a

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credit on this side right You're crediting ten grand of

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inventories You're losing ten grand cash right Since people have

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been in business for a long time prior well there

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was clearly some system of a stoning already in place

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But patchouli was the first to leave us evidence of

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ledgers that carefully tracked the merchants debits and credits But

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those were the good old days Times were simple Water

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was pure ish Nuclear fallout was light Business wasn't nearly

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as complicated as it was about to become So what

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happened Well over the course of the next few centuries

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technology happened back when there was one horse Sure working

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for himself smelting one shoe at a time and selling

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it for a buck when all the accounting was easy

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And that Buck yeah it was literally the skin off

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a buck A deer That's how that's how we got

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the name anyway The horse sure bought some medal He

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bought some wood or coal He had nonunion child laborers

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also known as Social Security and the world continued to

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spin But then came along technology in the leverage it

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offered such that one worker and using mechanical helpers which

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costs relatively big money in risk like oppressed to stamp

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out twenty shoes at a time instead of one hammered

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a handmade one Well that system made accounting way more

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complex that sure might have needed to hire a worker

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or three He probably needed a bigger supplier or multiple

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suppliers of medals for the shoes and heat for the

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firing thing there He might have even found it useful

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toe hang bigger signs in front of his door saying

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horseshoeing services cheap or hoof it on overto Harry's for

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some great deals with key element here was the leverage

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brought about by the application of technology in producing stuff

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in short order a cottage industry where virtually no financial

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capital was needed to begin a business turned into one

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where relatively expensive equipment was justa must have element Without

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that technology the best price on horse sure could sell

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a shoe for Wasn't Labaki each and just kind of

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break even there But with the multi shoe Stamper technology

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he could sell the same shoes for thirty cents each

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and be just as profitable as he was making them

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one by one for a buck And in doing so

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the dollar per shoot people who do didn't evolve with

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technology while they all went bankrupt Those who wisely deployed

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capital to make their product bigger better cheaper Well they

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want So yeah Along came the Industrial Revolution and suddenly

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it took an actual brain a schooled one to be

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a bookkeeper Now there didn't exist just mom and pop

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shops but corporations swimming in complexity And once these corporations

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started creating in selling shares of stock or ownership in

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themselves well some new more advanced cost accounting systems were

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going to be required that allocated things in highly granular

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methods according to ownership and all kinds of other structural

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things that well just get into As companies hired more

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and more people had more complex processes and actually marketed

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their wares well the process of and value of accounting

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grew massively Those who mastered it learned to be highly

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efficient with their financial capital and with the way in

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which it was deployed I'ii choosing not to spend a

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fortune on massive amounts of year forward inventory but instead

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spending it on marketing or on delivery mechanisms to delight

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customers or on machinery to make the product of five

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percent cheaper each year Instead of merchants or manufacturers of

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products doing their own accounting well it had become worthwhile

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to pay someone else to do the accounting forum In

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other words accounting had become a profession and yet was

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immediately listed in Shmoop career guide with more complexity came

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or inspection from the outside world The government found abuses

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in the system and that meant the r word Regulation

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Governments felt the need to step in once accounting practices

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got too big for their britches as they related to

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investing practices and in nineteen thirty for the Securities Exchange

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Commission or SEC was formed requiring that reports be filed

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so they could keep an eye on everyone's accounting and

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rain in any shady dealings While their aim was to

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protect John Q Public from them fast talking city dwelling

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college boys who were looking to steal their hard earned

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money from picking corn all day on the farm They

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were also organisations created to set accounting standards such as

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FAZ be the Financial Accounting Standards Board that was created

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in nineteen seventy three And then of course well there

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was the stellar organization of accountant parties or soap which

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put together some killer raves and galas where countings could

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shed their horn rimmed glasses and pocket protectors and uh 00:05:48.327 --> [endTime] you know really cut loose

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