History of Accounting & The first Accounting Textbook

 Every new invention and technology has its own History. 

Accounting is a science as well as an art. This beautiful and scientific method of Accounting has made the business to track its position ranging from normal grocery shop owner to the largest business tycoons like Tata's, Birla's, Reliance. 

Have you ever tried to go to the flashback, to know from where and how the Accounting system started?

This information is dedicated to all the Chartered Accountants, to all the Accountants, to all the Book-Keepers, who are engaged in this profession throughout their life. Lets dive into the History of Accounting.

History of Accounting

The Accounting system that we use today had its beginning in systems used by merchants in Venice over 500 years ago.

Generally, historians agree that the Renaissance period began in what we now call Italy during the late 1200s AD. The Renaissance was well established by 1450. It saw a huge increase in trade with some merchants becoming very wealthy. Some merchants lent money even to the Kings. This rapid increase in trade and wealth led to the development of early banking systems. The city state of Venice went even further, developing an Accounting system to record complex financial dealings.

Most common accountants today regard the Franciscan friar and mathematician Luca Pacioli (1446-1517) as the 'Father of Accounting'. Pacioli did not claimed to have invented the accounting system as such, but he did represented the system in a way that others could easily understand.

First Accounting Textbook

Pacioli's most important manuscript was the 5 section book (translated into English) The collected knowledge of arithmetic, geometry, proportion and proportionality. The book was published in 1494, about the same time when Columbus discovered America. This book by Pacioli was one of the earliest books printed on the Gutenberg press.

This is how it all started for Pacioli, Guidobaldoda Montefeltro (1472-1508), the wealthy Duke of Urbino, asked Pacioli to help him manage his financial affairs. Pacioli did so, and was the first person to codify and publish the Venetian accounting system.

For the next century, The collected knowledge of arithmetic, geometry, proportion and proportionality was the only accounting textbook available. Most of the principles, processes and concepts described in this book have been adopted by accountants till today. These processes and concepts include the:

• accounting cycle
• use of journals and ledgers
• duality of financial transactions (debit equals credits or double entry book keeping)
• formation of accounting groups: Assets, Liabilities, Owner's Equity, Income, Revenue, Expenses
• year-end closing entries
• the trial balance, which Pacioli believed should be used to prove a balance ledger

The system Pacioli described in his book has become known as ' double-entry accounting' system

The first Accounting Textbook