Blame your taxes on Fra Luca Pacioli

Accounting is usually seen as a business topic and not one that attracts a great deal of historical investigation. It may be interesting, then, to take a look at some accounting history and learn a little more about its origins.

Luca Pacioli is known as the father of modern accounting. Born in 1445 in Italy, Pacioli was a Franciscan monk and 15th century bookkeeper who hung out with Leonardo da Vinci. Here’s a selfie . . . sorry, a portrait of Fra Pacioli.

In 1494, he put out his best known work and the work that defined “modern accounting” or “double entry accounting.” It was written in vernacular Italian with the title Summa de arithmetica, geometria, proportioni e proportionalita. It covers the basics of modern mathematics including ratios (such as the “Golden Ratio”), arithmetic and double entry accounting–a method developed by Venetian merchants, and which Pacioli was the first to document in detail and put down in writing. An image of an early edition of the book.

Ostensibly, the way it works is for every purchase you receive a “credit” and a corresponding “debit” for the same amount. Luca Pacioli outlines the equation for this in the following terms: “Assets = Liabilities + Owner’s Capital.” This equation, of course, is still used to this day. It is where the phrase “balance the books” becomes operative. A balanced book is one whose credits and debits match up.

If you’re curious as to how how double entry accounting differs from single entry and would like to read a little more on the subject generally then go ahead and follow this link to a quick explanation, you dummy.

Pacioli died in 1517, leaving behind a few well regarded Renaissance texts on mathematics as well as translations of ancient texts. Coincidentally, he has received much posthumous criticism for allegedly plagiarizing parts of his Summa work from Renaissance man, Piero della Francesca.

There you have it. A quick description of modern accounting methods and a short history behind the first man to document them, Fra Luca Pacioli.

Thanks for reading, and let us know what you think of our “historical” update!

Be Sociable, Share!

Seattle CPAAbout Seattle CPA
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.