CHAPTER 2 - Development and Principles of Book-keeping

Abstract

This chapter traces the development of book-keeping systems and examines the principles of operating the system. One of the first accounts of recorded transactions dates back to the year 2285 B.C. in Babylon. Examination of Egyptian papyrus scrolls has revealed careful records of income and expenditure. The Ancient Greeks developed a crude clearing-house system and early Roman records show signs of household accounts. In the twelfth and thirteenth centuries, Venetian merchants originated a system of accounting which became a standard international system—Double-entry Book-keeping. Double entry book-keeping has been defined as that system by which every transaction involving a transfer of money or money's worth is recorded in two separate accounts forming part of a series, not merely by way of repetition, but to record the two distinct aspects in which every such transaction is capable of being regarded. Double entry book-keeping provides its own built-in check on the arithmetical accuracy of the system through the preparation of a Trial Balance.