What Is the Evolution of Accounting Theory?


Diego Sanchez

Accounting, as a discipline, has undergone significant changes over the years. From its early days as a means of keeping records of transactions to its current state as an essential tool for decision-making, accounting theory has evolved significantly. In this article, we will delve into the evolution of accounting theory and explore how it has changed over time.

The Early Days of Accounting Theory

The origins of accounting can be traced back to ancient civilizations such as Egypt, Babylon, and Greece. These early societies used accounting methods to keep track of their assets and liabilities. In particular, the Egyptians created one of the earliest known bookkeeping systems around 2000 BC.

During the medieval period in Europe, merchants began using double-entry bookkeeping to record their financial transactions. This system was first documented by Luca Pacioli in his book Summa de Arithmetica, Geometria, Proportioni et Proportionalita in 1494. Pacioli’s work is widely regarded as the birth of modern accounting theory.

The Rise of Modern Accounting Theory

In the early 20th century, a group of academics sought to develop a more scientific approach to accounting. This led to the development of what is known as “Classical Accounting Theory.” According to this theory, financial statements should be based on objective data and should provide an accurate representation of a company’s financial position.

However, critics argued that this approach failed to account for certain intangible assets such as brand value or human capital. As a result, a new school of thought emerged in the 1950s known as “Neoclassical Accounting Theory.” This approach emphasized the importance of subjective information such as market trends and consumer behavior.

Recent Developments in Accounting Theory

In recent years, there has been a growing emphasis on sustainability and corporate social responsibility (CSR). As a result, many accounting theorists have started to incorporate these factors into their work. This has led to the emergence of “Sustainability Accounting Theory,” which seeks to measure a company’s environmental and social impact as well as its financial performance.

Another recent development in accounting theory is the growing use of technology. With the rise of big data and artificial intelligence, accountants can now analyze vast amounts of information in real-time. This has led to the emergence of “Digital Accounting Theory,” which emphasizes the use of technology to improve accounting practices.


In conclusion, accounting theory has come a long way since its early days in ancient civilizations. From double-entry bookkeeping to modern digital accounting practices, the discipline has evolved significantly over time. As new challenges such as sustainability and technology emerge, we can expect accounting theory to continue evolving in response.