What do railroads and accountants have in common?
The fascinating answer is found in “Shedding Light on Business Accounts,” a history lesson of sorts from Barron’s Online.
Author John Steele Gordon tracks the origins of business accounting to the early days of the American railroads, which “were prodigious users of capital, and most were financed by selling stock and bonds to outside investors. For the first time in economic history,” Gordon writes, “many owners of large businesses and the managers of those businesses were separated and came to have different interests in how the books were kept. The managers, naturally, wanted things to look as good as possible. The owners wanted to know the truth and to be able to compare results with other companies in order to know if the managers were doing a good job.”
Enter the accountants. The article is a wonderful examination of the history of the profession, and an important reminder of the integral role CPAs play in corporate America and our capital markets.