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The document contains 5 questions related to the historical development of accounting. Question 1 discusses why early accounting records quantified volumes rather than currency. Question 2 examines the 7 pre-conditions necessary for an orderly accounting system identified by Littleton. Question 3 explains why single-entry accounting persisted during the "Age of Stagnation". Question 4 discusses similarities between Muslim accounting practices and those recommended by Luca Pacioli. Question 5 evaluates problems with Roman numerals that led to advances in writing systems.

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87 views2 pages

Tutorial 1 Ans

The document contains 5 questions related to the historical development of accounting. Question 1 discusses why early accounting records quantified volumes rather than currency. Question 2 examines the 7 pre-conditions necessary for an orderly accounting system identified by Littleton. Question 3 explains why single-entry accounting persisted during the "Age of Stagnation". Question 4 discusses similarities between Muslim accounting practices and those recommended by Luca Pacioli. Question 5 evaluates problems with Roman numerals that led to advances in writing systems.

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Liew Kin Yuan
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UKAF4023 ACCOUNTING THEORY AND PRACTICE OCT 2022

UNIVERSITI TUNKU ABDUL RAHMAN


FACULTY OF ACCOUNTANCY AND MANAGEMENT
ACADEMIC YEAR 2022/2023
BACHELOR OF ACCOUNTING (HONOURS)
TUTORIAL QUESTIONS

TUTORIAL 1 - HISTORICAL DEVELOPMENT OF ACCOUNTING


Question 1
record transaction in term of volume not in currency
Early records were quantified in terms of physical volumes rather than currency thus the
concepts of income and performance could not be applied. Discuss the rationale behind such
practices.

Question 2
Why was Littleton’s seven pre-conditions necessary for the emergence of an orderly
accounting system?

Question 3 at pass
owner = manager
During the “Age of Stagnation” why did single entry accounting persist and why were
businesses slow to adopt the double entry system?

Question 4
Luca Pacioli is recognised as the Father of Accounting through his recommendations made in
his “Summa” to the accounting practices. However, during the Dark Ages, there were many
essential features of accounting practices happened in the Muslim Civilisations. Discuss the
similarities of the practices.

Question 5
Evaluate problems of the roman numerals and Arabic numbers that led to further development
in writing.
Q1
• Emphasis was just on integrity and accountability rather than performance.
• During this time, ancient lords kept records to be aware of amount of wealth the held.
• Audit were intended to keep a check on workers and to prevent fraud and misappropriation, not basis of performance measurement.

Q2
The seven pre-conditions were things that were important for a properly business to operate alongside a proper accounting system.
1. Private property: The power to change ownership, because bookkeeping is concerned with recording the facts about property and property rights.
2. Capital: Wealth productively employed, because otherwise commerce would be trivial and credit would not exist.
3. Commerce: The interchange of goods on a widespread level, because purely local trading in small volume would not create the sort of press of business needed to spur the
creation of an organized system to replace the existing hodgepodge of record-keeping.
4. Credit: The present use of future goods, because there would have been little impetus to record transactions completed on the spot.
5. Writing: A mechanism for making a permanent record in a common language, given the limits of human memory.
6. Money: The "common denominator" for exchanges, since there is no need for bookkeeping except as it reduces transactions to a set of monetary values.
7. Arithmetic: A method of computing the monetary details of the deal.

Q3
• The prolonged existence of single entry, cash-based systems was due to existence of mostly small family businesses operating as decentralized institutions.
• Prolonged use of single entry was most likely due to the small size of businesses with little distinction between ownership and management and the relatively few transactions
involved.
• Double entry, accrual-based accounting was not necessary as there were no outside shareholder requiring more uniform reporting systems.
• In the public sector, funds were allocated by budgets and expected to be spent. The budgets were cash based with no carry forward provisions. There was no need for an
accrual system with debtors and creditors.

Q4
• In Muslim accounting practices, all financial transactions are to be in writing. Similarly, in Summa, Pacioli wrote that no point must be omitted in the day book.
• In Muslim practices, transactions recorded first in day book, then in multi column ledger. Similarly, in Summa, Pacioli recommended three books: day book, journal & ledger.
• In Muslim practices, at regular intervals the accounts were summarised, and monthly income and expenditure accounts as well as Annual Statement were produced. Similarly, in
Summa, Pacioli recommended Year-end closing entries and proposed trial balance to provide arithmetical check on records and used to prove a balanced ledger.
• In Muslim practices, all accounting work should be done by a trustworthy person. Similarly, in Summa, Pacioli recommended that one important element is to have a good
accountant.

Q5
• There is no symbol for zero, and there is no way to calculate fractions. This hindered the ability to develop a universally understood, sophisticated math system, and made trading
more difficult.
• Difficulty with the multiplication and division of numbers.

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