The profession of accounting is one of the oldest in existence. It’s been practiced for centuries and can be traced back to the 13th century
where it was being used to great benefit by the Venetians. However, Italian mathematician, Luca Pacioli, was the first to describe double entry bookkeeping in his 1494 book. The method was in use by the Venetians during the Italian Renaissance. That publication earned him the appellation of “Father of Modern Accounting.”
Even before Pacioli and the Venetians, a rudimentary form of accounting was being used by the Mesopotamians in 7500 B.C. They used a system of clay objects, each of which represented a specific type of goods, the number and their financial worth. The Mesopotamians even kept an account of labor and costs.
Pacioli Taught de Vinci
The mathematician lived with Leonardo de Vinci and instructed him in math. Pacioli was also known as Luca di Borgo in reference to his birthplace of Borgo, Sansepolcro, Tuscany. He was educated in what was required to be a merchant.
In his book, Pacioli described the use of ledgers and journals, emphasizing the need for balancing credits and debits at the end of each day. Also included was the information on recording assets, accounts receivable, expenses, income, capital, and inventory. In his book, he introduced the rest of the world at that time to income statements and balance sheets. Pacioli also proposed a code of ethics for accountants.
Pacioli’s Impact on Accounting
His description of double entry accounting revolutionized the way that businesses began overseeing and managing their operations. It improved the efficiency of enterprises and helped owners achieve greater profitability. The essentials of double entry accounting have changed little over the centuries. The information contained in Pacioli’s book is still relied upon today by lending institutions, investment agencies, not for profit organizations, and businesses – a gift to the financial world from the “Father of Modern Accounting.”
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