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Accounting: When Did the Bean Counters Start Counting Their Beans? 7 Views
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Description:
Bookkeepers and accountants work together to keep a company going. Find out more in this fun video.
Transcript
- 00:00
Accounting Allah shmoop When did the bean counters start counting
- 00:05
their beans Welcome to the briefest history of accounting lesson
- 00:09
you will ever digest At least hear from up The
- 00:12
history of accounting won't help you With the day to
- 00:14
day counting in presenting of beans it'll set you up
Full Transcript
- 00:17
to recognize patterns of failure and success When stumbling through
- 00:21
the myriad pieces of data you have to codify organize
- 00:23
and put into a neat little columns while praying to
- 00:26
the God of O C D Well the earliest examples
- 00:29
of accounting are well a little hazy because people were
- 00:32
buying and selling stuff a way back in ancient civilizations
- 00:35
like remember the Silk Road Yeah that think they had
- 00:38
to develop ways to keep track of their money in
- 00:40
money out right Well while some early accounting records have
- 00:43
been unearth there's not a lot of clarity on the
- 00:46
precise workings of these systems Suffice it to say that
- 00:48
the ancient Mesopotamians Egyptians and Babylonian all got their accounting
- 00:53
on in one form or another But while no one's
- 00:55
sure exactly when accounting God its humble beginnings well there
- 00:58
are records that were left behind by a man named
- 01:01
Luka Patchouli Italian If you couldn't guess who in fourteen
- 01:04
ninety four described the accounting system used by Venetian merchants
- 01:09
or by you know merchants of Venice for all you
- 01:11
Shakespeare nuts out there He described the introduction of a
- 01:14
double entry bookkeeping system that the merchants used to track
- 01:17
all their income and the outcome Double entry Yeah set
- 01:21
of columns like this where Deb It's happened on one
- 01:23
side and withdrawal of ten grand in cash there too
- 01:27
Then by ten grand in inventory which happens as a
- 01:30
credit on this side right You're crediting ten grand of
- 01:32
inventories You're losing ten grand cash right Since people have
- 01:35
been in business for a long time prior well there
- 01:37
was clearly some system of a stoning already in place
- 01:40
But patchouli was the first to leave us evidence of
- 01:42
ledgers that carefully tracked the merchants debits and credits But
- 01:46
those were the good old days Times were simple Water
- 01:48
was pure ish Nuclear fallout was light Business wasn't nearly
- 01:52
as complicated as it was about to become So what
- 01:55
happened Well over the course of the next few centuries
- 01:58
technology happened back when there was one horse Sure working
- 02:01
for himself smelting one shoe at a time and selling
- 02:04
it for a buck when all the accounting was easy
- 02:06
And that Buck yeah it was literally the skin off
- 02:09
a buck A deer That's how that's how we got
- 02:11
the name anyway The horse sure bought some medal He
- 02:13
bought some wood or coal He had nonunion child laborers
- 02:17
also known as Social Security and the world continued to
- 02:20
spin But then came along technology in the leverage it
- 02:22
offered such that one worker and using mechanical helpers which
- 02:26
costs relatively big money in risk like oppressed to stamp
- 02:30
out twenty shoes at a time instead of one hammered
- 02:33
a handmade one Well that system made accounting way more
- 02:36
complex that sure might have needed to hire a worker
- 02:40
or three He probably needed a bigger supplier or multiple
- 02:43
suppliers of medals for the shoes and heat for the
- 02:46
firing thing there He might have even found it useful
- 02:49
toe hang bigger signs in front of his door saying
- 02:52
horseshoeing services cheap or hoof it on overto Harry's for
- 02:57
some great deals with key element here was the leverage
- 03:00
brought about by the application of technology in producing stuff
- 03:03
in short order a cottage industry where virtually no financial
- 03:07
capital was needed to begin a business turned into one
- 03:09
where relatively expensive equipment was justa must have element Without
- 03:14
that technology the best price on horse sure could sell
- 03:17
a shoe for Wasn't Labaki each and just kind of
- 03:20
break even there But with the multi shoe Stamper technology
- 03:23
he could sell the same shoes for thirty cents each
- 03:26
and be just as profitable as he was making them
- 03:29
one by one for a buck And in doing so
- 03:31
the dollar per shoot people who do didn't evolve with
- 03:34
technology while they all went bankrupt Those who wisely deployed
- 03:38
capital to make their product bigger better cheaper Well they
- 03:41
want So yeah Along came the Industrial Revolution and suddenly
- 03:44
it took an actual brain a schooled one to be
- 03:47
a bookkeeper Now there didn't exist just mom and pop
- 03:51
shops but corporations swimming in complexity And once these corporations
- 03:55
started creating in selling shares of stock or ownership in
- 03:59
themselves well some new more advanced cost accounting systems were
- 04:02
going to be required that allocated things in highly granular
- 04:06
methods according to ownership and all kinds of other structural
- 04:09
things that well just get into As companies hired more
- 04:12
and more people had more complex processes and actually marketed
- 04:15
their wares well the process of and value of accounting
- 04:19
grew massively Those who mastered it learned to be highly
- 04:22
efficient with their financial capital and with the way in
- 04:24
which it was deployed I'ii choosing not to spend a
- 04:27
fortune on massive amounts of year forward inventory but instead
- 04:31
spending it on marketing or on delivery mechanisms to delight
- 04:34
customers or on machinery to make the product of five
- 04:38
percent cheaper each year Instead of merchants or manufacturers of
- 04:41
products doing their own accounting well it had become worthwhile
- 04:44
to pay someone else to do the accounting forum In
- 04:47
other words accounting had become a profession and yet was
- 04:51
immediately listed in Shmoop career guide with more complexity came
- 04:55
or inspection from the outside world The government found abuses
- 04:58
in the system and that meant the r word Regulation
- 05:01
Governments felt the need to step in once accounting practices
- 05:04
got too big for their britches as they related to
- 05:06
investing practices and in nineteen thirty for the Securities Exchange
- 05:10
Commission or SEC was formed requiring that reports be filed
- 05:14
so they could keep an eye on everyone's accounting and
- 05:17
rain in any shady dealings While their aim was to
- 05:19
protect John Q Public from them fast talking city dwelling
- 05:22
college boys who were looking to steal their hard earned
- 05:25
money from picking corn all day on the farm They
- 05:28
were also organisations created to set accounting standards such as
- 05:31
FAZ be the Financial Accounting Standards Board that was created
- 05:34
in nineteen seventy three And then of course well there
- 05:37
was the stellar organization of accountant parties or soap which
- 05:41
put together some killer raves and galas where countings could
- 05:44
shed their horn rimmed glasses and pocket protectors and uh 00:05:48.327 --> [endTime] you know really cut loose
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