CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Accounting is often vaguely defined as the language of business even then, this vague definition is not without its benefits. A language is a medium of communication; communication deals with the identification, processing, transmitting and receiving information. To say that accounting is the language of business information is identified, processed, transmitting and received by the parties in business.Every language has rules of usage, technicalities which may not be ignored for effective communication, the same is true of accounting more importantly, every language has an history which its stages of development and growth for language, like culture, dead, but living, and growth is a characteristic of living things likewise accounting in the form it is known today, did not just appear suddenly, its evolution followed a process at the nearly stage unconscious but later every carefully guided.
Since accounting serves the interest of business, to be effective, it must keep space with the various stages of business of development. It cannot afford to lie behind, otherwise it will lose its relevance as an effective communication medium.The purpose of this paper is to trace in a summary fashion, the various stages of the evolution and development of accounting theory and practices from the earliest times unto the present. The chapter will process from the Middle East to Europe and it eventual dispersal. The chapter will also find some space to devote to the development of accounting in Nigeria.
EVOLUTION OF ACCOUNTING
The definition of accounting as the language of business communication is further useful in the guest for its evolution. For it implies that accounting must be, at least as old as business exchange indeed, business exchange would be impossible without a medium of communication. Even before was invented, there must have been, in the days of trade-barter, a method of determining by the parties involved, that the items to be exchange were of comparable value. It is not difficult to imagine that any unsatisfied party would trigger a haggling and bargaining process in a bid to extract a fairer deal. The notion of fairness and comparability involved accounting.The development of money was as a result of the desire to have a more objective method of determining past values for comparison purposes.
Therefore, money was invented to serve an accounting purpose, as a measure of value on his ware, in a process that must be accounting. From the discussion so far, it can be observed that when commerce advance beyond the level of trade by adequate for its needs. Therefore money was invented, this somewhat gives the lie to the definition of accounting only in monetary terms.Another stage in the evolutionary process must been when commerce developed to the level of processing in which material, labour and overheads are employed to produce a trade-able item. This relatively complex advance implied a greater level of sophistication for accounting, which needs to have some method of costing the inputs and outputs as well as pricing.The point being made is that accounting predates writing.
All those early stages, and as was adequate at some times metal records sufficiently served the purpose of accounting pre-date. At some state, however, after the invention of writing and in response to the demands of business that was becoming increasingly complex, written records became necessary.It is interesting that some of the earliest records known today are accounting records. They are of the ancient middle-eastern civilization of Egypt, Mesopotania, Crete and Mycenae. They were mainly records of physical quantities of goods, suggesting that accounting pre-dates monetary economy. The system was flexible enough and soon explained to accommodate money measure of money was not coinage and paper therefore some difficulties were experienced in maintaining the records.About 700B.C coinage was invented, probably in Lydia. It spread with time to other Mediterranean cultures, making it possible for accounting records to reflect money values. This is why some researchers have maintained that accounting is a true sense, originated in classical Greece.