BARTER: DEVELOPMENT OF ACCOUNTING PRACTICE AND THEORY

John Mair, in 1752, stated, “Barter, or the exchange of goods for goods, is nothing else but buying and selling blended together.” This statement, for all its seeming simplicity, is an excellent expression of the confusion which has accompanied the practice and theory of recording this most basic commercial transaction. Can one accounting transaction be both a sale and a purchase at one and the same time and for the same accounting entity?

The proper recording of the barter transaction has occupied the attention of accounting text book authors, beginning in 1494 with Pacioli, with various authors expounding different solutions for almost 500 years. It was not until 1971 that a sound theoretical solution was presented.