Curious facts about Luca Pacioli, the Father of Accounting

 

Portrait of Luca Pacioli, attributed to Jacopo de Barbari (and maybe painted, at least partially, by Leonardo da Vinci)

Hello, everyone:

Accounting surely has few heroes, but certainly one of the most acknowledged was Luca Pacioli (Borgo Sansepolcro, Tuscany; c. 1447 – June 19, 1517), who was the first person to publish (1494) detailed material on the double-entry system of accounting. This publication formed the basis for manuals on bookkeeping, standardized the method, and led to the development of the current accounting system. Thus, he’s credited as the father of accounting and double-entry bookkeeping (although he didn’t invent it).

Pacioli was a Franciscan friar, abacus school and university teacher, mathematician, author of at least ten books, a chess expert, and also a close friend and tutor of Leonardo da Vinci, and a tutor of Albrecht Dürer.

Pacioli was the son of a modest farmer. Orphaned at 10, he became a friar like all his brothers, probably seeing the Franciscan order and pious life as an opportunity to deepen his studies. Aged 18, he moved to Venice, and thereafter, to Rome, Urbino, Perugia, Zara and Naples, being in contact with the Italian intellectual, economic and political elite. He studied mathematics at the Scuola di Rialto, and spent many years teaching practical mathematics (abacus), the one used by merchants, craftsmen, architects, engineers and artists, including his longtime friend, Leonardo da Vinci (who designed 60 tables of Archimedean solids, that appeared on the Summa, the most renowned Pacioli’s work).

His teachings (possibly taking ideas from a brief and, at the time, unpublished manuscript, Della mercatura e del mercante Perfetto, of the Ragusant merchant Benedetto Cotrugli, the first bookkeeping manuscript and trade manual, written in 1458 and published in 1573) were published in a section entitled Particularis de Computis et Scripturris (Details of calculation and recording) of his book Summa de Arithmetica, Geometria, Proportioni et Proportionate (Venice, 1494), a colossal textbook (615 pages, including 27 pages describing double-entry bookkeeping) for use in the schools of Northern Italy, basically a synthesis of the Renaissance mathematical knowledge, that enjoyed a long print run of 2,000 copies, and was widely translated, copied, and plagiarized across Europe (being this the reason of his deep influence on the history of capitalism).

In this section (Book 9, consisting of 36 Chapters), he describes in vernacular Italian (instead of Latin) the “Venetian Method”, i.e., the bookkeeping one used by Venetian merchants, including most of the accounting cycle as known as of today. He described the use of journals and ledges, while also presented an early reference to the Rule of 72 (a method for estimating an investment’s doubling time), and wisely stated that there are three necessities for a successful business: cash or credit, a good accountant, and good internal control (bello ordine). He also warned that a person should not go to sleep at night until the debits equal the credits (a prophetic quote about something that many accountants surely can suffer at times!).

A page of the Summa de Arithmetica, depicting an image of Pacioli

When teaching bookkeeping, Pacioli adopted the same approach done in his teaching of algebra, explaining how it works mathematically in five principles (in practice, axioms) that form the foundation of double entry:

1.           All transactions involve two elements: an item exchanged and a form of settlement.

2.           All forms of settlement can substitute for each other.

3.           One element is debit and the other is credit.

4.           The amount of the debit equals the amount of the credit.

5.           The entries in the money column are to be in one currency only.

In spite that Pacioli explicitly states in the Summa that he contributed no original mathematical content (without not explicitly attributing any of the material to other sources), the second and third volumes of Pacioli’s work were uncredited and slightly rewritten versions of works of Piero della Francesca. For that reason, Pacioli has been accused several times (Centuries later) of plagiarism (an issue of non-concern during Pacioli’s life).

Nevertheless, Summa de Arithmetica is considered as one of the most important books on mathematics of the European Renaissance, and was pivotal for the popularization of the double-entry bookkeeping, trial balances, balance sheets and other accounting tools still used today (obliging to ask ourselves about Pacioli’s place in history, if Cotrugli’s work was published before the Summa was).

He also wrote De Ludo Scachorum (On the Game of Chess) and De Viribus Quantitatis (On the Powers of Numbers), an unpublished treatise on magic and mathematics (translated and published in English only in 2007), including the first known guide to practice card tricks. In summary, he was an erudite, a practical educator and, with any doubt, a true fanatic of numbers.

Until next time,

 

Camilo García Sarmiento

 

Sources

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