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