A Study on the Development Process of Japan’s Accounting and Accounting Big Bang

Abstract

Japan has comparatively long history of accounting among Asian countries. In Japan, Accounting had begun among merchant in Edo period and took steps of development process from double－entry bookkeeping, internal information accounting and external information accounting to this day a Japanese Accounting. In the early stage of Edo period, Ashigakacho (足利帳)－a Japanese balance sheet mainly by Doyama family (冨山家)－ was developed. Sanyocho (算用帳) was the beginning of a double－entry bookkeeping which was recorded in gonoike currency exchange in Osaka. The main reason of the development of accounting at that period was not because to provide information to external stakeholders, but rather big merchants implemented management accounting to operate their stores efficiently. Japan, approximately 20 years ago, experienced a business recession and stagnation of asset due to collapse of bubble economy, which led to companies with poor records of profit management suffered large amount of loss and lack of appropriation fund mainly on marketable securities, loans and tangible fixed assets. To minimize accounting error under these circumstances, it led to perform extensive reformation of accounting system. It is called a Big－bang in Japan and comprehensively re－evaluated management based on paper profit. It also led to the change into the management with consolidated accounting. This is called the “Accounting Big－bang” in Japan, and the accounting policy that generates the fake profit was prohibited, and the change from the individual company’s financial statements to the consolidated accounting policy was made. Therefore, this study aims to show how the basis of the current accounting system was formed by grasping the rapid changes in accounting regulations during the Japanese accounting Big Bang.