Chapter – 1
Introduction to Accounting
Origin and history of Accounting can be traced back to some 10,000 years ago. The population in the area known as Mesopotamia, later Persia, and today the countries of Iran and Iraq had an active trading between towns and cities up and down the two rivers started the accounting concepts. At that time there were no letters or numbers. The merchants had to ship their merchandise up and down the rivers. They have to trust the boat man with their goods. There were a lot of disagreements about how much was shipped versus what was received at the other end between the merchants and the shippers. To deal such problem, merchants came up with small clay tokens, in various shapes and with various markings, to indicate different products, which would mean a basket of grain, another would mean a pot of oil, etc. They had over 200 such tokens to indicate a large variety of common goods, including food, leather, clothing, utensils, tools, jewelry, etc. Before shipping their goods, a merchant would take one token for each item in the shipment, and encase the tokens in a ball of clay, called a "bollae" (pronounced "bowl-eye") - meaning ball. The ball would be dried in the sun, given to the boatman, and then broken by the buyer on the other end of the transaction. The buyer would match the tokens with the items in the shipment, to verify that everything sent was accounted for. Early references to accounting concepts are found in the Vedas, In atharvaveda and the Nirukta denoting ‘sale’. Sulka in the Rig veda clearly means ‘price’ are found indicating the accounting practices.
In the Dharma Sutras it denotes a ‘tax’. Roman history also gives traces of accounting. The Res Gestae Divi Augusti (Latin: "The Deeds of the Divine Augustus") is a remarkable account to the Roman people of the Emperor Augustus' stewardship. It listed