Companies generally need accounting books to manage their financial information, comply with tax regulations, and make informed decisions. However, accounting books have been used since before the consolidation of the first companies and have undergone a series of changes that have allowed them to adapt to the needs of each era. Below, we’ll explore the evolution of accounting books for companies.
Accounting books for companies
When we talk about accounting books for businesses, we’re referring to the books or systems where formal records of a business’s, company’s, or entity’s financial transactions are kept. Accounting books include journals, general ledgers, and financial statements that help record income, expenses, assets, and liabilities, allowing the financial health of a company or organization to be monitored.
Evolution
The accounting book had its beginnings around 5,000 BC since then, it has evolved significantly over time, adapting to changes in business practices, regulations, and evolving technology.
Antique
Initially, accounting books consisted of journals and ledgers, with transactions recorded manually. The first accounting books were made of clay and papyrus tablets, which recorded goods exchanged through barter systems and were used to aid in the financial management of temples in ancient Mesopotamia and ancient Egypt.
Roman empire
With the economic revolution brought about by the rise of the Roman Empire, accounting books underwent a significant change, as financial records became more structured and scrolls were used to facilitate their management. This type of Roman financial record-keeping system allowed for more detailed documentation and monitoring of taxes, trade, and government spending.
Middle Ages
Accounting books were an indispensable tool for managing trade and financial transactions during the Middle Ages, as merchants and businesses kept handwritten books to record transactions, debts, and credits, which were then recorded by scribes and accountants of the time.
At the end of the Middle Ages, the double-entry accounting system was introduced, which represented a significant evolution in both accounting and ledgers, making the ledger a more precise tool, as this system guarantees that each transaction will be recorded in two accounts (debits and credits).
Industrial revolution
The Industrial Revolution marked a turning point in human history, as well as in accounting, as it laid the foundations for modern financial management. As businesses grew and expanded, financial management became increasingly complex, resulting in the evolution of accounting books, which became more sophisticated to allow for more accurate and structured recording of financial information.
At this point, “professional accountants” emerged to manage corporate finances, leading to the standardization of financial statements and the implementation of audits to ensure the accuracy and transparency of financial records (recorded in companies’ accounting books), making accounting books an increasingly important and essential financial tool.
Beginning of the 19th century
Accounting books have become an essential financial tool for businesses, governments, and financial institutions, as they help maintain sound financial management through the transparency and accuracy of financial records.
Due to the increasing use of financial reporting at the corporate level, accounting principles and regulations have been developed to ensure consistency, such as GAAP (Generally Accepted Accounting Principles) established by governments and financial institutions.
For this reason, corporate accounting books were managed by professional accountants, who specialized in calculations and kept records of transactions manually and with meticulous organization. This tool was essential for optimizing efficiency, ensuring tax compliance, and ensuring more precise financial transparency for companies.
Digital Age
Accounting books began their most significant transformation in the mid-19th century, as even though much of the financial and accounting records were kept manually, companies began implementing centralized computers for payroll and financial calculations, laying the foundation for accounting and ledgers in the digital age.
By the end of the 19th century, businesses adopted the use of digital accounting systems (accounting software), replacing manual accounting and ledgers. Such software integrates with other business systems and functions, allowing for greater efficiency and accuracy in financial records. In this way, accounting books went from being manual books to digital financial systems, generating a great impact and evolution in accounting and financial management.
Present and future
The digital age brought about a drastic shift in business accounting records, moving from traditional paper-based ledgers (with manual records and calculations) to digital ledgers or financial systems with automatic records and calculations. However, technology continues to advance, and with it, markets, e-commerce, and financial management continue to evolve. Therefore, business accounting records also continue to adapt to these new changes.
Currently, business accounting books are characterized by being more efficient, secure, transparent and accessible financial systems, since they keep their financial records within cloud platforms, which allows companies to have access to their accounting information in real time, as well as the automation of records and other financial operations with a higher level of security.
Additionally, more and more companies are adopting AI- and blockchain-based ledgers, which provide businesses with automated financial data analysis, helping them make strategic financial decisions and ensuring greater transparency, and preventing fraud and data manipulation.
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