Life of Luca Pacioli
Luca Pacioli who was known as the father of accounting born in 1446 in Sansepolcro where he also received his earlier education known as abbaco education. The knowledge he got was focused on knowledge required by merchants. While working as a tutor to the three sons of merchant, he continued his own education in Venice in 1464 and during this time he wrote his first book on accounting. Then he wrote a comprehensive abbaco textbook in vernacular for his students who were studying from him during the period of 1477 and 1478. Then he started teaching at the University level in Italy and he taught in numbers of Universities in Italy including Perugia, holding the first chair in mathematics and contributing his knowledge to his students. In 1494, his first book on Summa de arithmetica, geometria and proportioni et proportionalita got the publication in the city of Venice in Italy.
It was the time when he got huge reception for his work written on geometry, arithmetic and mathematical proportions. Then in 1497, he got a invitation to resume his working in Milan from Lodovico Sforza where he collaborated and transferred his ideas on mathematics and taught mathematics to Leonardo da Vinci. When the Louis XII of France captured the city and drove their patron out, it was the time when Pacioli and Leonardo had to leave the city of Milan in 1499. In 1517, Pacioli died at the age of 70 in Sansepolcro where he spent most of his time at the final years of his life.
Luca Pacioli’s Contribution to Accounting
The contribution of Luca pacioli in accounting was honored by accountants around the world who gathered in San Sepulcro an Italian village to pay their huge tribute to his book published on double-entry accounting. The first accounting book which was published in 1494 was based on five sections in his mathematical book title in which he showed ‘Everything about Arithmetic, Geometry and Proportions’. Until the 16th century, this book written on accounting served as the only textbook on accounting around the world and due to this significant contribution, Luca Pacioli, was no doubt the father of accounting. He did not invent the system but he described the method which was used by merchants in Venice during the period of Italian Renaissance. The system he introduced in his book of accounting was mostly the accounting cycle which is well-known in the modern world of accounting. Luca Pacioli introduced the use of journals and ledgers in accounting systems and warned that the accountant must not sleep until the debits are equaled to credits. The ledgers he introduced were based on assets receivables and inventories, liabilities, capital, expenditure and income accounts. Friar Luca also demonstrated the entries which the companies can use for their yearend and he proposed the entry of trial balance for a balanced ledger. He also introduced wide range of topics ranging from accounting ethics to cost accounting. His proposed accounting entries and year end closing entries became so famous that they were widely used in industrial and financial organizations in the modern world. Today, no organization can ignore his proposed journal and ledger accounting system and then showing the balance of debits and credits to get the desired results for the organizations. When he published his book on accounting, he was 49 years old in the year 1494, returned to Venice for the famous publication of his fifth book on Geometria, Summa de Arthmetica, Proportioni et Proportionalita. This book was written on Geometry, Everything about Arithmetic and Proportions. In this book, he presented the guide to the already written mathematical knowledge and bookkeeping was one of the most important accounting topics covered in this book. He presented 36 short written chapters on bookkeeping in which he gave the necessary instructions in the conduct of business and given the traders precious information on accounting without any delay as to his assets and liabilities. Luca Pacioli also introduced numerous details about bookkeeping techniques which were followed in texts and in professions for the next four centuries. Then the accounting historian Henry Rand Hatfield argued that Pacioli’s work was potentially significant even at the time of publication when it was first printed in November 10, 1494. Now his underlined accounting principles are used by various accounting practitioners in industrial accounting, public accounting, and accounting services for non-profit organizations. Accounting techniques were proved to be very effective for investors, business firms, lending institutions, and all the entire users of financial information are indebted to Luca Pacioli for his unbelievable and monumental role in the development of accounting.
Luca Pacioli’s Legacy
Due to his double-entry bookkeeping system in accounting, organizations can follow the transactions from one business to another which gave them right directions in financial growth. Organizations become much familiar about yearend accounting entries to make the best records of their expenditures and income in the form of yearend financial statements and income statements of the organizations. The system introduced by Luca Pacioli was efficient and reliable in record keeping for all types of businesses and organizations and it established the financial understanding through global investment possibilities. Today, investors, shareholders, business firms and lending institutions have appreciated and recognized his contributions as vital in the financial growth of different businesses around the world. His accounting systems and double-entry bookkeeping record systems are most widely used around the world in different manufacturing, industrial, services, and hospitality organizations. No organization can survive without adopting his introduced record keeping and double-entry accounting systems and system of accounting cycle which is most widely taught and used in professionals’ organizations and accounts institutions. Luca Pacioli’s introduced systems of accounting allowed people to record their investments and then attracting the contributions of wealthy merchants into their businesses. Without the contribution of Luca Pacioli in the field of accounting the trade with the new World and the Far East would have been slower and even halted together. He gave way to the integration of ideas during the period of Renaissance in Europe. At that time different fields were integrated to each other including art, science, business, engineering and mathematics was central to the all parts of the fields. He established very strong relationship and connection among various fields and the colleagues working with him during that time. His double entry bookkeeping books on accounting are now published in different languages such as German, English, Dutch and Italian helping people around the world to grasp knowledge in the field of accounting and then serve in their respective fields thanks to Luca Pacioli who has given us with such opportunities in the field of accounting.