ABSTRACT
This chapter discusses the nineteenth century when issues of accounting, auditing and accountability came to the fore, were addressed, and to some extent resolved. Railroads played a major role in the growth of the nineteenth-century US and British economies, and their contribution to the development of accounting and auditing has attracted considerable scholarly attention. Railroads utilised several innovative reporting practices: early use of cash flow statements, the identification of ‘Net earnings’, extensive socioeconomic reporting, and the development of the double account system. The broad history of railroading in the UK is similar to that in the US, but the environment was different. In the US, most early railroads were developmental enterprises whose profits were dependent on future geographic expansion. An attribute that established large railroads as modern businesses was the capital requirements of the natural monopolies, which were far in excess of those of other contemporary businesses and which, in turn, created barriers to competitive entry.
