Father’s Day only comes around once a year, so in honour of fathers and celebrating fatherhood the team at Simplyco have decided to investigate who the founding father of accountancy was and look further at what he contributed to our sector to make it what it is today.
Fra Luca Bartolomeo de Pacioli
Fra Luca Bartolomeo de Pacioli born in 1445 was an Italian mathematician and seminal contributor to the field now known as accounting. He is often referred to as the father of bookkeeping and he popularized the double-entry system of book-keeping used today. The double-entry system got its name as every entry to an account requires a corresponding and opposite (debit and credit) entry to a different account; ‘Debit,’ is Latin for ‘he owes’ and ‘credit’ Latin for ‘he trusts’.
In 1494, Pacioli published what is said to have been the first volumes in printed form on algebra and other mathematical subjects, an encyclopaedic work called the ‘Summa de arithmetica, geometrica, proportioni et proportionalita’. In his writings in the Summa, Pacioli described the method of keeping accounts that Venetian merchants used during the Italian Renaissance, known as the double-entry accounting system. Although Pacioli codified rather than invented this system, the act of widely circulating and promoting the technique earned him his name as the ‘Father of Accounting’.
The system he published included most of the accounting cycle as we know it today. He described the use of journals and ledgers and warned that a person should not go to sleep at night until the debits equalled the credits! His ledger had accounts for assets (including receivables and inventories), liabilities, capital, income, and expenses—the account categories that are reported on an organization’s balance sheet and income statement respectively. He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger. Also, his book touches on a wide range of related topics from accounting ethics to cost accounting.
Double-entry bookkeeping itself may not sound all that exciting, but without it, most experts would confess that the industrial revolution and growth of free-market capitalism could never have happened. Pacioli’s writings and description of double-entry bookkeeping ensured that the process would become widely adopted across the Western world and would encourage the rise of Europe and the United States as global powers.
Without the distribution of his work in the fifteenth and sixteenth centuries the economy as we know it today could not exist. Pacioli’s description of double-entry bookkeeping led to the rise of modern accounting, accurate record keeping and the overall growth of industry and trade. Understanding his role in accounting history is important for understanding Western history and the way in which the economy functions today.
Happy Father’s Day
We hope you enjoyed reading the facts about one of the founding fathers of accountancy. All of the team here at Simplyco would like to wish all of our customers a Happy Father’s Day!
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