Debits and Credits: Pt. 2

The Duchy of Urbino. 

Although he is considered the father of modern accounting, Pacioli never intended to be. Rather he was trying to write a math textbook for his students. At the time Pacioli was the tutor to sons of rich merchants.. Every time he had to design a new lesson or look up a trigonomic relation, he had to travel back to the library of the Duke of Urbino--a weeks travel.

Pacioli, teaching math.
Geometry, based on what he is drawing,
and he reading out of Euclid while
the Duke of Urbino watches
creepily from behind.

So he decided to write a math textbook. Now, why I call it a textbook is that it was different than most of the academic works of its time. It was written in Latin AND Italian. The language choice is what differentiates this work from other academic writings. Most scholars wrote in only Latin because they were writing for other scholars. Pacioli chose to write in mainly Italian because this book was for the masses not for the elite few cloistered in universities and libraries.

WARNING: Below Sean postulates on Pacioli's motives without academic/peer reviewed sources

Now why was accounting put in a math textbook? I have two reasons: one historical and boring, and the second is pure conjecture (and much more fun).

Reason 1: The Business major hadn't been invented yet. All studies were traditionally in latin and universities more  focused on studies of divinity and science. Schooling was a luxury. Most students were nobility or preparing for a life of the cloth. Applied mathematics, such as accounting, where most commonly taught in apprenticeships.

Reason 2: His benefactors encouraged him to include it. Again let me remind you this is conjecture. Remember Pacioli  is tutor to sons of wealthy merchants. They are ensuring this friar lives quite comfortably (as evident by his personal accounts he uses as an example in teaching inventories). If they asked him to include a section on the skills needed for their sons to follow them into mercantilism, how could Pacioli refuse.

Pacioli on Accounting

The section on accounting is rather small. Frankly tacked on at the end of the book. It is a relatively short introduction to the subject. Although it contains 36 chapters, it really only amounts to about 50 pages. He starts simply enough explaining how so set up your books then teaches basic journal entries, and works his way toward a trial balance. Yet, through all of that, he is able to fit in a chapter where he does nothing but give advice--on more than just accounting, on life in general. 

I will write more about this in the future. Give quick mini-lessons on Pacioli's technique and compare it to what is taught in this modern era. It is rather amazing how many of his techniques are still in use to this day.

While not the Vitruvian Man,
Leonardo Da Vinci taught perfect
penmanship in Pacioli's work
"De divina proportione"

So there it is. The story of Pacioli's writings on accounting. This however is not the totality of his life. Pacioli went on to write many more books. One of his other works was referenced in the pop culture sensation writings of Dan Brown. He went on to befriend and work with Leonardo DaVinci They traveled together and worked on two books together. It is an amazing thing, when one of the greatest minds of the Renaissance is willing to illustrate the writings of this forgotten Friar. If time permits me I hope to talk more about the writings of Pacioli and his life after "De Scripturis" 

Debits and Credits: Pt. 1

My first memory of intro to accounting (besides realizing taking a summer class in a lecture hall without windows was a big mistake) was our instructor trying to teach us the idea of debits and credits. He tried to relate it to our understanding of debit cards and credit cards, but that devolved when he started into rant about how their names should be switched.

I figured this is a good place to start, right? Study the history/origin of the terms debit and credit. Little did I realize that this once simple idea would start me on months of research and take me back to the end of the 15th century to the beginning of double entry accounting.

Turns out the guy who first used the terms debit and credit was the first person to ever to write down the double entry accounting system. Fr. Luca Pacioli is the father of accounting and he never gets any credit. I don't quite understand how he gets completely passed by in accounting curriculums. Most biology majors are required to at least read sections of "Origin of Species," but in Accounting you dive right into the current system. The only historical perspective that accounting classes ever really give is the mention of IFRS (the International Financial Reporting Standards) and the acknowledgement that one day GAAP might be history.

So how does he introduce and teach these new terms of debit and credit? Simply put, he doesn't. While this is the first book to use debit and credit, he never gives much explanation on the words. Pacioli assumes the reader has an understanding of debtors and creditors. He does, however, devote a chapter--even if the chapter is only a paragraph long--explaining two other terms: "per" and "a". These terms act as our modern abbreviation "dr" and "cr".

This is a screen shot of the first use of the words (and maybe also my current Facebook cover photo)

While this could be viewed as the answer to my simple inquiry and its time to move on. I learned a lot about the history of bookkeeping and want to use this as a jumping off point for a series of posts on Pacioli and his treatise on double entry accounting.

Proust had his cookie, I have my debits and credits. (That reference is for my family friend in Racine, or any  other long suffering academics who happen to be reading this blog).

Yours,

Sean "suddenly finds himself an ardent Thunder fan" Clyne