TRANSFORMATION OF ACCOUNTING SYSTEM: A STUDY WITH REFERENCE TO INDIA

Abstract

The evolution of accounting in India has been a fascinating journey, from the ancient times of Manu Smriti and Kautilya’s Arthashastra to the modern era of digitalisation and blockchain technology. This study is significant as it provides insights into the various phases of accounting systems used in India, highlighting the significant milestones and transformations that have shaped the field. The earliest evidence of accounting principles in India can be traced back to the Smriti literature, dating to 700 BC, which established regulations for exchanging goods and services. Manu’s conception of interest rates based on the Varna system resulted in financial inclusion, while Kautilya’s Arthashastra focused on administrative aspects and sustainable development. Kautilya, a 4th-century B.C.E. economist, recognised the importance of accounting methods and developed a comprehensive system that included bookkeeping rules, periodic accounting, income statements, and independent audits. The introduction of the double-entry bookkeeping system and the advent of computers revolutionised the way accounting records were maintained, enabling the generation of financial statements automatically. The merger of computers with technologies like blockchain has further transformed the accounting landscape, allowing for real-time record-keeping and the recording of complex transactions. This study aims to provide insights into the rich history and development of accounting in India, showcasing the profound impact of technological advancements on the field.