History of Double Entry Bookkeeping
Frater Luca Bartolomes Pacioli was born about 1445 at Borgo San Sepulcro in Tuscany. He was a "Renaissance man" in the true sense of the expression, acquiring an amazing knowledge of diverse technical subjects - religion, business, military science, mathematics, medicine, art, music, law and language.
He believed (with his time) in the interrelatedness of these widely varying disciplines and in the special importance of those, such as mathematics and accounting, which exhibit harmony and balance.
His friend Leonardo da Vinci helped prepare the drawings for Pacioli's 1497 work, Divina Proportione; in turn, Pacioli is reputed to have calculated for da Vinci the quantity of bronze needed for the artist's huge statue of Duke Lidovico Sforza of Milan.
Around 1482, after completing his third treatise on mathematics, Pacioli - like many of his time who sought preferment as a teacher - he became a Franciscan friar. He traveled throughout Italy, lecturing on mathematics, and in 1486 he completed his university education with the equivalent of a doctorate degree.
Pacioli never claimed to have invented double entry bookkeeping. Thirty-six years before his monumental treatise on the subject, Benedetto Cotrugli wrote Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader), which included a brief chapter which described many of the features of double entry. Although this work was not published for more than a century, Pacioli was familiar with the manuscript and credited Cotrugli with originating the double entry method.
[Other scholars only give Cotrugli credit for writing the first book on the double entry method and suggest that it had been used for hundreds of years before that in certain parts of Italy – see article #2 following for further info]
Pacioli was about 50 years old in 1494 - just two years after Columbus discovered America - when he returned to Venice for the publication of his fifth book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion). It was written as a digest and guide to existing mathematical knowledge, and bookkeeping was only one of five topics covered. The Summa's 36 short chapters on bookkeeping, entitled De Computis et Scripturis (Of Reckonings and Writings) were added "in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business," and to "give the trader without delay information as to his assets and liabilities." (All quotes from the translation by J.B. Geijsbeek, Ancient Double Entry Bookkeeping: Lucas Pacioli's Treatise, 1914)
Perhaps the best proof that Pacioli's work was considered potentially significant even at the time of publication was the very fact that it was printed on November 10, 1494. Guttenberg had just a quarter-century earlier invented metal type, and it was still an extremely expensive proposition to print a book.
The trial balance (summa summarium) is the end of Pacioli's accounting cycle. Debit amounts from the old ledger are listed on the left side of the balance sheet and credits on the right. The the two totals equal, the old ledger is considered balanced. If not, says Pacioli, "that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you."
Some eight hundred years ago the seed of modern bookkeeping was sown in Florence, Italy. Fragments dated 1211 of the account book of a Florentine banker present the earliest known evidence of the double entry-system. From this time the art of bookkeeping began to bud and continued to grow in the fertile soil of commercial practice in Italy.
About three hundred years later the double entry concept came to full fruition in Venice. In 1494 an Italian monk published a book on mathematics which included 36 chapters explaining double entry bookkeeping. In his book, "Summa", Luca Paciolo wrote "we describe the method employed in Venice".
Paciolo thus made no claim to the invention of the double entry system, but its inclusion in his book has resulted in his being generally recognized as the the author of the first published double entry bookkeeping text.
Benedetto Cotrugli is believed to have written the first double entry bookkeeping book in 1458. It and other hand written manuscripts seem to have circulated in the Italian city states during the 15th century. Cotrugli's book was not published until 1573 so Paciolo may claim the first published text. Hatfield wrote "it is seldom the case that a first book on a subject has so dominated its literature as was the case with Paciolo's De Computis et Scripturis.