Modern Accounting Systems
According to the available literature, modern accounting began in Italy in the thirteenth century. Since then, accounting principles have essentially remained unchanged but the procedures and purview of accounting have continued to evolve inexorably. This evolution has generated an extensive array of modern accounting systems. However, many of these systems are no longer modern: they became obsolete because of technological advances and despite their advent during the epoch of modern accounting.
Modern accounting systems – like their early counterparts from the start of civilization to the thirteenth century – have evolved as societies progressed and necessitated more sophisticated accounting capabilities. Some technological advances were responses to the societies’ need for these capabilities and modernized accounting systems became essential because of the “knowledge revolution” or “information explosion”.
For many centuries before today’s computerized accounting systems became commonplace, many organizations utilized manual accounting systems with the related general and subsidiary ledgers. On account of significant influences from technological advances, modern accounting systems have progressed from manual to mechanical and computerized accounting systems. In manual accounting systems, ledgers and other accounting records were once prepared with the aid of adding machines that were the available accounting technology during a particular period. From adding machines, modern accounting systems progressed to using calculators, punched card readers, electronic data processing devices, state of the art computers, online accounting applications and combinations of these technologies. Today, cloud-based accounting systems are among the existing modern accounting systems.
Advances in the development of computer hardware and software have reinforced the evolution of modern accounting systems since Ada Lovelace invented the first computing machine for accounting in the nineteenth century. During the twentieth and twenty-first centuries, advances in telecommunications, data modeling and computer science have overwhelmingly influenced the evolution of modern accounting systems. Technology has revolutionized accounting methodologies and accounting software has made accounting tasks easier, more accurate and more cost-effective. Before the proliferation of accounting software, computerized accounting systems were owned and operated by a limited number of entities. The opposite has been the case since accounting software packages became widely available.
Peachtree accounting software, distributed initially by a software publishing company established in 1978, was the first such product retailed in stores. Beginning in 1983, Intuit Incorporated sold its Quicken, TurboTax and QuickBooks accounting systems for use by any purchaser. Today, Intuit sells modern accounting systems that include desktop and online versions of QuickBooks; these QuickBooks products are primarily for use by small businesses. Many other organizations and individuals create and retail modern accounting systems in the form of accounting software packages. The use of these accounting software packages has eliminated many manual accounting procedures and has reduced many aspects of accounting to data entry that can be easily done by personnel who need not have training in accounting. Consequently, modern accounting systems have helped to reduce the manpower required for doing an organization’s accounting. Simultaneously, the accounting is done more efficiently and more economically. Modern accounting systems, therefore, enable entities to operate more profitably.