What’s a counting house?

[ad_1]

A counting house is the physical location a business uses to carry out its accounting functions and may also be called a clearing house as compt is an archaic form of the verb meaning to count. Not all businesses have their own accounting operations, as it sometimes proves more cost-effective to have a professional accounting service perform this function. Accounting is a core function of any modern business, however, and must be completed to government standards to comply with tax regulations and avoid government audit and intervention in private business matters.

Accounting practices can be traced back to prehistoric times, and accounting can be considered the oldest profession in the world. Keeping track of goods and services, even the most basic ones like food, clothing, and shelter, can be considered a form of accounting. Literally, the term means “counting” and, around AD 1300, it was defined as a reckoning for money given or received.

The formation of house counting practices really began to spread in early civilization, however, when commerce became widespread. This required the creation of exchangeable currency systems so that equitable valuation of goods and services could take place. Historians place the origin of accounting records and domestic practices told in the Babylonian Empire of 4500 BC.

The Code of Hammurabi, written in 2250 BC in Egypt, is the first extant version of the laws of human history that put accounting principles into practice when judging various violations of law. The modern version of bookkeeping, which involves a strict process of balancing credits and debits, is known to have originated in the institutions of the house of account that emerged in Venice, Italy, during the Italian Renaissance of the late 1400s. business center for all of Europe, and the trade of many distant regions was carried on by merchants and accountants there.

The Italian establishment of the form for modern accounting principles originated in a treatise by the Italian Fra Luca Pacioli in AD 1494, a mathematician and professor of business practices who was a friend of Leonardo da Vinci. The Summa of Arithmetic Geometry, Proportional, and Proportional, or The Collective Knowledge of Arithmetic, Geometry, Proportion, and Proportionality, was a book like many Renaissance texts of the time that attempted to cover a wide range of science and mathematics. The Summa, however, also had an important section devoted to the double-entry method of accounting.

Pacioli’s accounting description included the use of formal ledgers and ledgers and set the stage for the strict precedent in accounting domestic practices that the books were not balanced until the debits and credits were equalized. Accounting for modern-era domestic practices does, in fact, closely resemble those of thirteenth-century Italy, as Pacioli’s descriptions of commercial accounting in Venice included details such as entries for receivables, liabilities, capital goods, income, and expenditure. Modern balance sheets and income statements are also based on Summa examples, and Pacioli has set the stage for the practice of fiscal year closing financial statements as well. His book was one of the first ever printed and widely distributed, being translated into German, Russian, Dutch and English and making him a celebrity of the time that resulted in the story that labeled him as “The Father of Accounting”.

Asset Smart.

[ad_2]