Accounting has a history that is usually discussed in terms of one seminal event- the invention and dissemination of the double entry bookkeeping processes. Paul Garner and Atsuo Tsuji (1995) report that the first printed treatise of bookkeeping in the world is the Summa de Arithemetica, Geometria, Proportioni et Proportionalita written by Luca Pacioli. The treatise was published in Venice in 1494, and was reprinted at Toscolano in 1523. This work is one of the most important books on mathematics and has had an enormous impact on the field of accounting ever since. The Treatise 11 of Section 9 of this book – that is, “particulars de Coputis et Scripturis,” is a treatise about double entry bookkeeping.
The system of bookkeeping that Luca Pacioli described first introduced the practice and theory that had developed in commercial cities in Italy, particularly in Venice. Pacioli wrote in the first chapter of his treatise, “We will here adopt the method employed in Venice which among others is certainly to be recommended, for with it one can carry with any other method”. Pacioli was born in Borgo San Sepolcro, lived in Venice and became the tutor of the three sons of a rich merchant, Antonio de Rompiasi. It seems that he could have had the chance to see the account books of the Venetian merchants and to study the method of double entry bookkeeping in Venice.
The bookkeeping system that Luca Pacioli has several distinct characteristics:
1. Pacioli wrote that there are three things needed by one who wished to carry on business diligently. The most important of these is cash or any other substantial power. The second is a good accountant and a sharp bookkeeper. The third is good order in order to arrange all business to debit and credit. 2. Pacioli explained the opening inventory, but he did not describe the closing inventory. 3. Pacioli’s account book system is three account books- that is, a day book....