Accounting Methods – The Journey to the Modern Day

Where did bookkeeping first start? It was all the way back in the 15th Century when bookkeeping first began. The Italian mathematician Luca Pacioli first formalized the bookkeeping method. It started as a simplistic method to help them understand business productivity and has evolved ever since.

Now, I’m not as old as Luca Pacioli but, in my accounting studies in high school we learned the basics that each debit must marry a credit and debits were on the left and credits on the right, it was drilled into us. This was considered pivotal to bookkeeping knowledge then.

Little did we know that many years later we would have accounting software that almost does all the hard work for us. Who would have known.

How did we do it then?

I started with general ledger books and ledger sheets. I was always excited at the start of the new school year, what I was about to learn. I recall my first professional job in a country bank, being a Ledger machine operator, where I used a ledger machine.

The ledger machine role meant manually typing (like on a typewriter) into the ledger machine all the checks and deposit amounts. These were printed onto a semi-cardboard ledger for each customer. We would work out the bank interest on a simple calculator and add that onto the ledger, that was a task and a half. Now this was long before ATMs, credit cards, PayPal and internet banking.

The machines did not have a memory as the modern-day computer does, nor could you go back to older financial transactions. So double-entry bookkeeping was not enough to get an idea of the company’s day to day operations, and therefore the new and modern method of accounting became necessary.

Why did it change?

I specialize in QuickBooks Online and I recall on one of my visits to Silicon Valley at the Intuit headquarters in Mountain View, California, the story of Scott Cook. From his own kitchen table, Cook came up with what we now know as Intuit accounting software—all from the need of helping his wife balance her checkbook.

With his work experience and from the awareness of the emergence of personal computers, he began looking for a computer programmer. He found Tom Prolux and, in 1983, Intuit was formed.

What we see today in most accounting software is due to someone thinking of a way to make our lives easier. Maybe you will help our lives become easier with the next genius idea.

What’s this thing called GST?

The emergence of GST in Australia in 2000 became the accounting industry’s biggest growth recorded. This was due to new requirements for the business owner to comply with the new Australian Goods and Services tax reporting, that we now know as BAS reporting (Business Activity Statements).

There was a study that identified significant ongoing record keeping and accounting costs that were required by small businesses in order to meet their GST obligations: using Victorian University Research Repository titled, “The impact of the introduction of the GST on small business in Australia.”

So, we went from big and clunky accounting ledger books to accounting software that we were able to download from CDs or floppy discs to stick into our hard drives. We also were travelling to clients’ offices to get their bookkeeping and office lady BASs done.

Printing all our work and keeping copies for compliance and record keeping, monthly bank reconciliations, monthly and yearly profit & loss and balance sheets—all this was printed for every client.

We were storing folders and folders for each client, with paper records for compliance and record keeping for years. Just in case of a potential audit and keeping end of year financials, this meant having a room full of filing cabinets. Sending paper records to the accountant at the end of each year was via snail mail too.

Today we have it easy, accessing clients’ accounting files from anywhere, at any time all from a PC, laptop, iPad or iPhone. Holding all records in the cloud for storage, no need for messy filing cabinets and accessible anywhere and all we need to do is click the share button and you can share it with anyone you need to see it instantly.

Today’s methods

Looking at today’s accounting methods, we have the latest advancement in accounting software. It is no longer just to book keep, to run compliance and audit the company finances but also to give the business owner a better perspective of the financials anytime.

We have AI (Artificial Intelligence), which helps with bank feeds and automates the accounts for us making life quicker and simpler. You can produce a quote and invoice and email it directly to the client, set up bills and through an ABA file upload to the bank and pay hundreds of suppliers in one click.

We can split the income and expenses into different jobs for the clients easily, so they know where they are making their money. We also set up and tailor the chart of accounts to suit the industry and the client’s needs.

We can run and automate Payroll and lodge STP (Single Touch Payroll) events keeping compliant at all times. We can pay the employees’ Superannuation straight from the software payroll. It can also auto calculate a BAS (Business Activity Statements) for us and lodge directly from the software to the ATO, just to name a few features. This saves us a whole lot of time compared to the past.

My personal favorite features are through accounting software today, we help business owners make sense of their finances in real time through smart bookkeeping so that they can grow their business and we can work from anywhere.

Lauretta Finis currently is a member of the Australian Intuit Trainer/Writer Network, presenting courses, workshops and advising how to be efficient in QuickBooks Online from basic to advanced levels. To professional QuickBooks Advisors, and Business owner’s in hundreds of training sessions throughout Australia. Quick Bizness Bookkeeping Solutions, Lauretta’s bookkeeping practice, commenced in 2005, was honored by winning the Australian runner-up in Intuit’s “Global Firm of the Future” search in 2016. In 2021, she won after being named in the Top 100 Advisors globally the top honor of Top International Advisor