ABSTRACT
This chapter traces the evolution of accounting to its present-day system of double-entry book keeping. This evolution had afew dfmitim stages which are described in this chapter. Initial records of counting are found in bones marked with tally strokes. Subsequent records of counting were to record sheep and goats given to the shepherd for grazing Formal accounting systems emerged with the accumulation of wealth in temples. Documented system of accounting is found in Arthasastra. of the third century SC. In this treatise, account heads for grouping expenses and irwome, and cost centers are documented. The advent of Islam and the practice of ^akat, a religions 'tax', converted accounting from a discreet activity to a regular activity with annual frequency. The concept of a distinct entity for business came with the joint stock company. Around the same time, the problem of dealing with 'Dead Stock' in Bombayfor the East India Company gave rise to the 'Going Concern' concept. As the double entry system came up in Italy, three categories of accounts emerged. From the Personal accounts that were recognized till thai, real accounts and nominal accounts emerged. Along with this troika, the rules for double entry emerged. Starting with amend 70 odd rules, it was finally distilled to the three rules of double-entry bookkeeping. While Italy is credited with inventing double entry bookkeeping, there is a lorn voice that links the origin of the double-entry system to the Bahi-Khata system of the traditional Indian accounting. The link is a very logical explanation. Can India be the birthplace for double-entry bookkeeping?
