Reviewed by Lucy C. Lee Rutgers University
Chinese civilization is characterized by a long history of agricultural economy with a culture rich in literature, art and philosophy. However, virtually nothing is known about the history of accounting in China. This two-volume book, written in Chinese, by Professor D. Y. Kuo at Chung-Nan College of Finance and Economics, is an attempt to uncover the development of accounting in ancient China, in a political system and philosophical atmosphere which were basically anti-business. Professor Kuo’s research is based mainly on historical literature and partly on recent archaeological finds.
Volume I starts from prehistoric times when people tied knots on strings for “counting” events and ends with the Sung dynasty (960-1279 A.D.). The theme is on the evolution of government accounting. Unfortunately, historical materials were lacking on accounting methods developed in the private sector. Some highlights are as follows.
As early as the Shia dynasty (2205-1766 B.C.), remains of shells and bones showed records of goods and livestock in kind and in quantity, a written language had already been developed. At the first stage of the development of accounting, spanning three dynasties: Shia, Shang (1766-1122 B.C.), and Chou (1122 B.C.-250 A.D.), transactions were recorded chronologically in single entries and in words. Also, the term “accounting” (Kwai-ji) was officially established in the early part of Chou dynasty.
A significant development made during the Han dynasty (206 B.C-220 A.D.) was to adopt the format of using three sections in accounting reports to higher authorities. Thus, the headings “In,” “Out,” and “Balance” became standard usage in reports submitted on a monthly, quarterly and annual basis. The main accounting books included the “Grain Inflow-Outflow,” “Cash Inflow-Outflow,” and “Goods Inflow-Outflow,” all kept on bamboo or wooden tablets, and source documents were numbered.
Accounting reached a level of sophistication due to unifica-tion of the monetary system and standardization of accounting figures during the T’ang dynasty (618-975 A.D.). Cash journals, general and subsidiary ledgers were kept in bound volumes of paper. The government accounting office was responsible for internal revenues and the national budget, and the auditing department performed audits on reports from all levels of governmental units. Another significant improvement of the reports was made during this period, which required four sections: “Beginning balance,” “In,” “Out,” and “Ending balance” on the reports.
Volume I ends with the Sung dynasty (960-1279 A.D.) during which government accounting systems were further refined and standardized, but never went beyond single-entry bookkeeping. Apparently single-entry bookkeeping was adequate to generate accounting reports for China’s governments for many centuries.
Professor Kuo’s work is significant and informative. It provides the eastern side of the story in the world history of accounting. I am looking forward to the forthcoming Volume II which will address the development of accounting in the pri-vate sector after the Sung dynasty.
