Who was Luca Pacioli?
He was Leonardo da Vinci's friend and is to this day the Godfather of double entry accounting which has stood the test of time because it is largely unchanged in over 500 years. What an amazing pair of friends they must have been. Did Luca look after Leonardo’s accounts I wonder?
Which industry other industries are able to claim such provenance?
Fra Luca Bartolomeo de Pacioli sometimes Paccioli or Paciolo; lived to the grand age of 70 (1447-1517). Unsurprisingly he was an Italian mathematician.
Wikipedia states:
Summa de arithmetica, geometria. Proportioni et proportionalita (Venice 1494), a textbook for use in the schools of Northern Italy. It was a synthesis of the mathematical knowledge of his time and contained the first printed work on algebra written in the vernacular (i.e., the spoken language of the day).
It is also notable for including one of the first published descriptions of the bookkeeping method that Venetian merchants used during the Italian Renaissance, known as the double-entry accounting system. The system he published included most of the accounting cycle as we know it today.
He described the use of journals and ledgers, and warned that a person should not go to sleep at night until the debits equalled the credits. His ledger had accounts for assets (including receivables and inventories), liabilities, capital, income, and expenses — the account categories that are reported on an organization's balance sheet and income statement, respectively. He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger.
He is widely considered the "Father of Accounting". Additionally, his treatise touches on a wide range of related topics from accounting ethics to cost accounting".
Pacioli dramatically affected the practice of accounting by describing the double-entry accounting method used in parts of Italy. This revolutionized how businesses oversaw their operations, enabling improved efficiency and profitability. The Summa's section on accounting was used internationally as an accounting textbook up to the mid-16th century. The essentials of double-entry accounting have for the most part remain unchanged for over 500 years.
Accounting practitioners in public accounting, industry, and not-for-profit organisations, as well as investors, lending institutions, business firms, and all other users for financial information are indebted to Luca Pacioli for his monumental role in the development of accounting."
The thing that strikes me the most (apart from the whole double entry thing) is that Luca said “ a person should not go to sleep at night until the debits equalled the credits”. And how true is that? How many a night have I sat staring at a screen working out why it does not balance….and I am defiantly not the only one!
Just like most amazing people of history wouldn't it be amazing if you could have a 1-2-1 to find out how he came onto this amazing theory of double entry and how he thought it would change the world? I guess we will never truly know?