IBM General Ledger & Financial Control (1956)

Being a complete nerd about early accounting and ERP software I happened upon an interesting book called General Ledger & Financial Control by IBM from 1956. This version has a minor update from 1960 but still a very early example of some of the very first accounting applications ever.

The majority of this book talks to the advantages of double-entry accounting and best practices in setting up a chart of accounts. The latter part of the book focuses on the advantages of computers in accounting. It doesn’t exactly talk much about software but it’s an interesting read for those of us in the ERP world. Consider that Generally Accepted Accounting Principles (GAAP) didn’t exist then as they do today since FASB didn’t event exist until 17 years later.

According to Wikipedia:

“Accounting standards have historically been set by the American Institute of Certified Public Accountants (AICPA) subject to Securities and Exchange Commission regulations. The AICPA first created the Committee on Accounting Procedure in 1939, and replaced that with the Accounting Principles Board in 1959. In 1973, the Accounting Principles Board was replaced by the Financial Accounting Standards Board (FASB) under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to advise and provide input on the accounting standards.”

Also consider that this book pre-dates the first documented implementation of a computer-based bill of material processor by Gene Thomas of IBM in 1961 (about 5 years after this book was written).

Below is an excerpt from the last page in the book (Copyright of IBM of course):

Let us sum up briefly the clear-cut, measurable advantages your company will derive from the IBM method of processing data:

CLEAR DEFINITION of subsidiary ledgers is a direct result of a diversified chart of accounts. Regardless of expansion or multiple subdivision in subsidiary accounts, entries, calculations, po stings, and summaries are all performed mechanically.

EFFICIENCY in handling the records of your company results in accurate and complete reports of all kinds. More important, these reports are timely-available when they are needed.

FLEXIBILITY of the method for handling data makes it possible to accommodate rapid expansion, corporate changes, revised tax structures, with a minimum of deviation from established routines, and without interruptions to normal flow of business.

TAX REPORTING to fulfill all the requirements of tax collection agencies is routine operation, rather than a year-end burden on your staff.

CONTROL over every phase of the business is a prime objective of management everywhere. The data and analytical material available in the IBM method makes close control a more easily attainable objective.

MORE INFORMATION becomes available than ever before. Mechanization of data processing makes possible routines that could not be attempted under slower and more cumbersome methods.

AUDITING is facilitated by the clear-cut audit trails left in documenting all details, all transactions. All final reports make complete reference to source documents.

BUDGETING is reduced to a smooth-working routine, and more accurate, workable budgets are the result.

ECONOMY OF TIME AND MONEY is one of the greatest benefits derived from the speed, accuracy, flexibility, and efficiency of the IBM method for general ledger accounting and financial control.


ibm1956 Early diagram explaining the IBM’s data processing system as applied to accounting. From General Ledger and Financial Control by IBM (1956).


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