Q2: Who is Luca Pacioli? And why should I care?
One person who died over 500 years ago (in 1517) wrote a book and, as a result, he is remembered today; and what he wrote about, is influencing millions of people all these centuries later. His name? Luca Pacioli.
Luca Pacioli (c.1445-1517) (pronounced pot-CHEE- oh-lee), an Italian mathematician and Franciscan monk, published in 1494 the Summa de arithmetica, geometrica, proportioni et proportionalita, which means (loosely) ‘Everything you wanted to know about arithmetic, geometry and proportion but were afraid to ask’. It is a summary of the mathematical knowledge of the time (which we see today as quite elementary arithmetic, geometry and algebra) and included bookkeeping as one of five topics covered.
Its section on bookkeeping contained 36 short chapters and is the first published book describing double-entry accounting, a method of accounting that was being used by merchants in Venice during the Italian Renaissance. His system included most of the aspects of accounting as we know it today. Although Luca Pacioli is usually referred to as the “Father of Accounting” he did not invent the system of double-entry bookkeeping. He was simply the first to describe it in a published book. Indeed, double-entry bookkeeping had probably been going on much earlier than Luca Pacioli’s time in the late 15th century. For example, “the partners Francesco di Marco da Prata and Domenica di Cambio drew up a detailed statement of assets and liabilities on August 30, 1389, quite in the modern manner.”
And why should I care? Knowing about Luca Pacioli (who published the first book on accounting and thus spread widely these ideas about accounting over 500 years ago) helps us begin to understand why we have double-entry accounting today, from a world before computers and where quills and ink were ‘hi-tech’