Double-Entry Bookkeeping
Details:
Double-entry bookkeeping, which probably dates back to 14th century Genoa, Italy, was first mentioned by Luca [first mentioned by] Pacioli* in 1494.
The system works by dividing the activities of a company into various accounts (e.g. property, cash, equipment, expenses, etc). Transactions are then recorded (on opposite pages of the accounts ledger) in terms of the movement of funds from one account to another.
Each transaction is recorded twice (a “double entry”), once on the left-hand page, where the amounts debited from each account are shown, and once on the right-hand page, where the same amounts are shown, each being credited to the relevant account to which funds have been moved.
At suitable intervals, the books are “balanced.” If the books have been properly kept, and no profit or loss has been made, the total on the debit side will equal the total on the credit side. If a profit has been made, the credits will be easily seen to exceed the debits. If a loss has been made, the opposite will be true.
Oneliner: Double-entry bookkeeping is a method of bookkeeping that relies on a two-sided accounting entry to maintain financial information. Every entry to an account requires a corresponding and opposite entry to a different account.
Bibliography:
- American Mathematical Society, http://www.ams.org/new-in-math/cover/book2.html.
History[]
Main article: History of accounting
The earliest extant accounting records that follow the modern double-entry system in Europe come from Amatino Manucci, a Florentine merchant at the end of the 13th century.[1] Manucci was employed by the Farolfi firm and the firm's ledger of 1299–1300 evidences full double-entry bookkeeping. Giovannino Farolfi & Company, a firm of Florentine merchants headquartered in Nîmes, acted as moneylenders to the Archbishop of Arles, their most important customer.[2] Some sources suggest that Giovanni di Bicci de' Medici introduced this method for the Medici bank in the 14th century, though evidence for this is lacking.[3]
The double-entry system began to propagate for practice in Italian merchant cities during the 14th century. Before this there may have been systems of accounting records on multiple books which, however, do not yet have the formal and methodical rigor necessary to control the business economy. In the course of the 16th century, Venice produced the theoretical accounting science by the writings of Luca Pacioli, Domenico Manzoni, Bartolomeo Fontana, the accountant Alvise Casanova[4] and the erudite Giovanni Antonio Tagliente.
Benedetto Cotrugli, a Ragusan merchant and ambassador to Naples, described double-entry bookkeeping in his treatise Della mercatura e del mercante perfetto. Although it was originally written in 1458, no manuscript older than 1475 is known to remain, and the treatise was not printed until 1573. The printer shortened and altered Cotrugli's treatment of double-entry bookkeeping, obscuring the history of the subject.[5][6]
Luca Pacioli, a Franciscan friar and collaborator of Leonardo da Vinci, first codified the system in his mathematics textbook Summa de arithmetica, geometria, proportioni et proportionalità published in Venice in 1494.[7] Pacioli is often called the "father of accounting" because he was the first to publish a detailed description of the double-entry system, thus enabling others to study and use it.[8][9][10]
In pre-modern Europe, double-entry bookkeeping had theological and cosmological connotations, recalling "both the scales of justice and the symmetry of God's world".[11]
Other claimants[]
Per some sources, double-entry bookkeeping was first pioneered by the Romans and in the Jewish community of the early-medieval Middle East.[12] In AD 70 Pliny the Elder described the structure of the "Tabulae Rationum" as "On one page all the disbursements are entered, on the other page all the receipts; both pages constitute a whole for each operation of every man".[13]
11th century Jewish bankers in Cairo used an intermediary form of credit-debit accounts in some of their documentation.[14] The Italian system has similarities with the older Indian "Jama–Nama" system which had debits and credits in a reverse order.
It is B. M. Lall Nigam's opinion that the Italian merchants likely learned the method from their interaction with ancient Indian merchants during the Greek and Roman sea trade relations, though he is unable to substantiate this with evidence.[15]
The oldest European record of a complete double-entry system is the Messari (Italian: Treasurer's) accounts of the Republic of Genoa in 1340. The Messari accounts contain debits and credits journalised in a bilateral form, and include balances carried forward from the preceding year, and therefore enjoy general recognition as a double-entry system.[16] By the end of the 15th century, the bankers and merchants of Florence, Genoa, Venice and Lübeck used this system widely....
Research notes
http://www.amazon.com/Double-Entry-Merchants-Created-Finance/dp/0393088960
Double Entry: How the Merchants of Venice Created Modern Finance
Jane Gleeson-White (Author)
› Visit Amazon's Jane Gleeson-White Page
Find all the books, read about the author, and more.
See search results for this author
Are you an author? Learn about Author Central
(Author)
http://www.abc.net.au/local/stories/2012/03/13/3451985.htm
jm keynes great depression GDP (kruznetz sp? fdr 1st nat'l econ) austerity
she refrs to am academic who said 2x entry funded Renn, thus art etc Medici, last supper funded by city state Florence, tanslation of gk/latin texts
arabic numbers hindu roman numeral sand and pebbles calculator (mult only for experts); "check" arabic word
venice 15th c monk P 1st eur math ency
crusades: economic boom italy north so accting needed 1095 kpfa 5/29/13 10 am ltrs and pol mini renn c12-13
http://www.bloomberg.com/news/2012-10-26/capitalist-tool-maker-taught-leonardo-math-lewis-lapham.html
In 1494, Luca Pacioli published his mathematical encyclopedia, with a section devoted to double- entry bookkeeping. The foundation of accounting, this system of numbers propelled the growth of capitalism and the modern economy.
(To listen to the podcast, click here.)
After learning the subject from Pacioli’s book, Leonardo da Vinci got him a job in Milan as the first Chair of Mathematics. There, he helped Leonardo develop linear perspective for the “Last Supper,” while the artist gave Pacioli insight on the golden ratio for his next book.
When the French army of Louis XII invaded Milan in October 1499, Pacioli was dragged from his lodgings and his mathematical models destroyed by soldiers who deemed them the devil’s work.
Along with other refugees, Pacioli and Leonardo were forced to flee to Mantua.
I spoke with Jane Gleeson-White, author of “Double Entry: How the Merchants of Venice Created Modern Finance,” on the following topics:
1. Quantification of Capital
2. Church Challenge
3. Last Supper
4. Purpose Equals Profit
5. Non-Monetary Transactions
Multimedia:
Audio interview:https://kpfa.org/episode/letters-and-politics-january-18-2017/