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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.

Language:
English Language

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

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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