Evolution of Accounting as a social science.
-Evolution of Accounting as a social science:-
In its oldest form, accounting aided the stewards to discharge their stewardship function. The wealthy men
employed stewards to manage their property; the stewards in turn rendered an account periodically of
their stewardship. This ‘Stewardship Accounting’ was the root of nancial accounting system. The presently
followed system of double-entry book-keeping has been developed only in the 15th Century. However,
historians found records of debit and credit dating back to the 12th Century. Although double-entry system
was followed, ‘stewardship accounting’ served the purpose of businessmen and wealthy persons at that
time. In most of the countries, stewardship accounting was prevalent till the emergence of large-scale
enterprises in the form of public limited companies.
In the second phase, the idea of nancial accounting emerged with the concept of joint stock company
and divorce of ownership from the management. To safeguard the interest of the shareholders and
investors, disclosure of nancial statements (mainly, pro t and loss account and balance sheet) and other
accounting information was moulded by law. Financial statements give periodic performance report by
way of pro t and loss account and nancial position at the end of the period by way of Balance Sheet.
It got the legal status due to changing relationships between the owners, economic entity and the
managers. With the democratisation of society, the relationships between the enterprise on the one hand,
the investors, employees, managers and governments on the other, have also undergone a sea-change.
Also the prospective investors and other business contact groups want to know a lot about the business
before entering into transactions. Thus, nancial accounting emerged as an information system to identify,
measure and communicate useful information for informed judgements and decisions by a broad group
of users. In the third phase, accounting information was generated to aid management decision- making
in particular. It contributed a lot to improve the quality of management decisions. This new dimension of
accounting is called Management Accounting and it is the development of 20th Century only. It is pervasive
enough to cover all spheres of management decisions.
Lastly, Social Responsibility Accounting is in the formative process, which aims at accounting for the social
cost incurred by business as well as the social bene t, created by it. It emerges from the growing social
awareness about the undesirable by-products of economic activities. While earning pro t, an enterprise
incurs numerous social costs like pollution, using the resources of society like materials, land, labour etc. To
compensate for this social cost, in today’s world, an enterprise is expected to generate some social bene ts
also like employment opportunities, recreation activities, more choice to customers at reasonable price,
better quality products etc. Therefore it is demanded that the accounting system should produce a report
measuring the social cost incurred and social bene ts generated.
Social Science study man as a member of society; they concern about social processes and the results and
consequences of social relationships. The usefulness of accounting to society as a whole is the fundamental
criterion to treat it as a social science. Although individuals may bene t from the availability of accounting
information, the accounting system generates information for social good. It serves social purposes, it
contributes for social progress; also it is being adapted to keep pace with social progress. So, accounting is
treated as a social science.
In its oldest form, accounting aided the stewards to discharge their stewardship function. The wealthy men
employed stewards to manage their property; the stewards in turn rendered an account periodically of
their stewardship. This ‘Stewardship Accounting’ was the root of nancial accounting system. The presently
followed system of double-entry book-keeping has been developed only in the 15th Century. However,
historians found records of debit and credit dating back to the 12th Century. Although double-entry system
was followed, ‘stewardship accounting’ served the purpose of businessmen and wealthy persons at that
time. In most of the countries, stewardship accounting was prevalent till the emergence of large-scale
enterprises in the form of public limited companies.
In the second phase, the idea of nancial accounting emerged with the concept of joint stock company
and divorce of ownership from the management. To safeguard the interest of the shareholders and
investors, disclosure of nancial statements (mainly, pro t and loss account and balance sheet) and other
accounting information was moulded by law. Financial statements give periodic performance report by
way of pro t and loss account and nancial position at the end of the period by way of Balance Sheet.
It got the legal status due to changing relationships between the owners, economic entity and the
managers. With the democratisation of society, the relationships between the enterprise on the one hand,
the investors, employees, managers and governments on the other, have also undergone a sea-change.
Also the prospective investors and other business contact groups want to know a lot about the business
before entering into transactions. Thus, nancial accounting emerged as an information system to identify,
measure and communicate useful information for informed judgements and decisions by a broad group
of users. In the third phase, accounting information was generated to aid management decision- making
in particular. It contributed a lot to improve the quality of management decisions. This new dimension of
accounting is called Management Accounting and it is the development of 20th Century only. It is pervasive
enough to cover all spheres of management decisions.
Lastly, Social Responsibility Accounting is in the formative process, which aims at accounting for the social
cost incurred by business as well as the social bene t, created by it. It emerges from the growing social
awareness about the undesirable by-products of economic activities. While earning pro t, an enterprise
incurs numerous social costs like pollution, using the resources of society like materials, land, labour etc. To
compensate for this social cost, in today’s world, an enterprise is expected to generate some social bene ts
also like employment opportunities, recreation activities, more choice to customers at reasonable price,
better quality products etc. Therefore it is demanded that the accounting system should produce a report
measuring the social cost incurred and social bene ts generated.
Social Science study man as a member of society; they concern about social processes and the results and
consequences of social relationships. The usefulness of accounting to society as a whole is the fundamental
criterion to treat it as a social science. Although individuals may bene t from the availability of accounting
information, the accounting system generates information for social good. It serves social purposes, it
contributes for social progress; also it is being adapted to keep pace with social progress. So, accounting is
treated as a social science.
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