The Accounting Historians Journal Vol. 17, No. 1 June 1990
Baladouni UNIVERSITY OF NEW ORLEANS
AN EARLY ATTEMPT AT BALANCE SHEET CLASSIFICATION AND FINANCIAL REPORTING
Abstract: A recent investigation into the archives of the English East India Company has produced the earliest known classified balance of accounts. Dated May 1, 1782, this statement predates the model balance sheet prescribed by the Companies Act of 1856 by some seventy-five years. This classified balance of accounts, together with extensive supplementary notes accompanying it, may be said to represent the earliest manifestation of financial reporting.
The history of the British balance sheet1 may be divided into two dominant periods: modern and premodern. What marks the beginning of the modern period is the model balance sheet prescribed by the Companies Act of 1856 [Edey and Panitpakdi, 1956]. This statutory model formally introduced the notion of balance sheet classification which has since served as a general guide in the preparation of the statement. In contrast to the modern period, the premodern period is characterized by an absence of balance sheet classification [Chatfield, pp. 68-72]. During this period, the balance sheet, known as balance of accounts, was prepared in unclassified form. It simply listed the company's assets and liabilities in account form and with no apparent order of succession. Included in the liabilities was the stockholders' investment. The difference between the total as-sets and total liabilities was shown as a balancing figure "in
1For studies on the history of British corporate financial reporting, see R. H. Parker, ed., "Select Bibliography of Works on the History of Accounting, 1981-1987," Accounting Historians Journal, Vol. 15, No. 2, Fall 1988; "Select Bibliography of Works on the History of Accounting, 1978-80" and "Select Bibliography of Works on the History of Accounting, 1969-1977," in R. H. Parker, ed., Bibliographies for Accounting Historians (New York: Arno Press, 1980); the studies are listed under "P. Corporate Accounting." See also: T. A. Lee and R. H. Parker, eds., The Evolution of Corporate Financial Reporting (New York: Garland Publishing, Inc., 1984).