Luca Pacioli Research Articles

Luca Pacioli: The Father of Accounting

In 1494, the first book on double-entry accounting was published by Luca Pacioli. Since Pacioli was a Franciscan friar, he might be referred to simply as Friar Luca. While Friar Luca is regarded as the Father of Accounting, he did not invent the system. Instead, he simply described a method used by merchants in Venice during the Italian Renaissance period. His system included most of the accounting cycle as we know it today. The first accounting book actually was one of five sections in Pacioli's mathematics book, titled Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportions). This section on accounting served as the world's only accounting textbook until well into the 16th century. Accounting practitioners in public accounting, industry, and not-for-profit organizations, 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.

Custom Fit or Off-the-Shelf Standards: Dilemma of Financial Reporting in Interactive World Economy

Approach to accounting, and the world in which it operates has changed over half-a-millennium since Luca Pacioli. The past century has seen a great expansion of investment and trade across national boundaries. If financial reporting were standardized in all or most national jurisdictions, certain economies in training of accountants and analysts, preparation and audit of financial reports, writing of rules of financial reporting, and perhaps their enforcement world-wide could be achieved. This argument led to the creation of International Accounting Standards Committee and its successor International Accounting Standards Board which has produced a body of International Financial Reporting Standards (IFRS). There are also substantial counter-arguments pointing to important dis-economies of standardization. If even individual countries have difficulty defending their single set of domestic standards against the criticism (that they do not fit companies from various industries and sizes), it seems even less plausible that a single set of world-wide standards can offer an efficient solution. A single set of standards do not leave any room to learn from trial-and-error experimentation and cross-border comparisons, and risk freezing us into an inefficient system of reporting. Further, rule-making bureaucracies have limitations of their own, and without competition, could easily sink into authoritative irrationality.The arguments for as well as against standardization are qualitative, and it has been difficult so far to compare them to decide what is better. After the initial burst of enthusiasm in the European Union for this effort, the poor performance of IFRS during the global financial crisis has cooled the enthusiasm. Some even claim that this misguided effort towards standardization was one of causes of the crisis. As doubts are voiced in the U.S., China, Japan, India, and even U.K., France and Germany about the wisdom of giving a standards monopoly to a single private sector body, it is also time for the emerging economies to rethink the balance between for international and local standards and between written rules and social norms of various societies.

Reflections on the Scientific Conceptual Streams in Leonardo da Vinci and His Relationship with Luca Pacioli

Leonardo da Vinci (1452-1519) is perhaps overrated for his contributions to physical science, since his technical approach. Nevertheless important components concerning practical problems of mechanics with great technical ability were abounded. He brought alive again the Nemorarius’ (fl. 12th - 13th century) tradition and his speculations on mechanics, if immature made known how difficult and elusive were the conceptual streams of the foundations of science for practitioners-artisans. Leonardo also had an interesting and intense relationship with mathematics but merely unhappy insights in his time. The meeting with Luca Bartolomeo de Pacioli (1445-1517) was very important for da Vinci since proposing stimulating speculations were implemented, but they were not definitive theoretical results. In this paper historical reflections notes on mechanics and mathematics in da Vinci and his relationships with Pacioli are presented.

BOOK REVIEWS

BOOK REVIEWS

Minute genius: A tribute to the role of Italy in the development of science

Minute genius: A tribute to the role of Italy in the development of science

Doppio ritratto del poliedrico Luca Pacioli

Questo articolo analizza le ricerche sull'autore del famoso dipinto di Luca Pacioli conservato al Museo di Capodimonte di Napoli. La sua identità non è chiaramente determinata, così come quella della figura a sinistra di Pacioli, che è generalmente considerata il giovane duca Guidobaldo di Montefeltro. Anche la sua personalità è oggetto di studio in quest'opera. Per questo motivo, tutti gli aspetti del dipinto che potrebbero far luce su questo tema sono esaminati con straordinario dettaglio. Tuttavia, non è possibile trarre conclusioni definitive sull'attribuzione del dipinto o sull'identità del giovane ritratto con Pacioli. Proprio il fatto che due persone siano raffigurate insieme ha dato origine al termine "Doppio Ritratto", con cui alcuni autori si riferiscono a questo dipinto.
 Per inciso, parlando della fama di cui Luca Pacioli godeva come matematico, tanto da meritarsi un dipinto, fatto singolare all'epoca per un matematico, ricordiamo anche coloro che tentarono di minare questa fama, a partire dal Vasari, che lo accusò di essere un plagiatore, strada seguita da vari altri autori, mentre altri difesero strenuamente il frate di Sansepolcro.

Book Reviews

JOHN FLOWER, Accounting and Distributive Justice (New York, NY: Routledge, 2010, ISBN 978-0-415-87177-8, pp. 201)

Using Mathematics to Answer Correctly the Mechanism of Debit and Credit, to Identify the Basic Limitations of Existing Accounting Standards, and to Suggest the Accounting Development

Perceived as a pure social science, prominent accounting scholars agree that the current accounting development overemphasizes on rules, and this has wide negative impacts on accounting education and research. Thus, accounting reform is necessary even though it is still unclear the direction of the reform.The basic thesis of this study is that accounting is an application of mathematics because accounting was documented in the mathematics book and written by Luca Pacioli as a mathematics professor. Firstly, this study shows the inappropriateness of current accounting teaching methods. Specifically, this study shows that the use of debits and credits is purely the application of mathematics. Secondly, this study identifies the limitation of the definition of financial statement elements, and proposes the alternative redefinition of the elements. Thirdly, this study shows that the use of a mathematical perspective helps accounting profession to solve current accounting issues. Finally, this study proposes the development of three pillars, i.e. mathematics, rules, and art, in a balanced manner to do accounting reform. This study provides a new perspective that the accounting development is based on the history of accounting itself, i.e. accounting as an application of mathematics. Using the mathematical perspective, not only do accounting scholars improve the accounting education but also we innovate accounting research agenda. In addition, this study offers insights to accounting standard boards interested in developing a global uniform of financial accounting standard that effectively work.

A Revisionist History Of Accounting: From The Origins Of Private Property To Venice In The Pacioli Era

This treatise takes a fresh (and somewhat contrarian) look at the long history of accounting lead-ing up to the time of Luca Pacioli, who has long been considered the father of accounting. It first examines the centuries immediately preceding the time at which Pacioli recorded the Venetian technique of double-entry bookkeeping, in order to reveal why the model appeared in Italy during the fifteenth century. It also addresses the manner in which Paciolis work misdirected accounting historians efforts as they have sought the origins of accounting. Secondly, this treatise looks at stimuli explaining probable origins of accounting in earliest sedentary human cultures, in order to separate origins of accounting activity from the origins of bookkeeping. It is posited not only that the dawn of the institution of private property was the sole requirement for the existence of accounting activity, but that many of the factors (including writing and formalized mathematical systems) often believed to be necessary prerequisites for accountancy are most likely consequences of, not prerequisites to, the accounting process. This treatise concentrates attention on accounting for privately-owned entities rather than governmental accounting issues, partly because Pacioli himself concentrated on that aspect of accounting, but most importantly because everything said herein regarding fundamentals of accountancy is equally valid, with appropriate modifications, for governmental and nonprofit entities.

Special issue on accounting and auditing

It is perhaps little known that accounting and mathematics have been connected for more than 500 years ago. In 1494, Luca Pacioli published his mathematics compendium Summa de Arithmetica, Geometria, Proportioni et Proportionalita consisting of 615 pages. “[T]he only significant part of the book that has ever been translated to English” was the 27-page treatise on bookkeeping,1 which defines the hour of birth of accounting. So to speak the study of double entry accounting was developed in concert with linear algebra.2 Beyond the joint development, which becomes apparent in Pacioli’s book, there are several reasons why accounting offers a very good application for mathematical techniques and mathematical knowledge. First, accounting phenomena cannot be understood best by just observing them. For generating predictions and interpretations [analytical] theory is required.3 Second, formalizing economic arguments by means of a mathematical model results in a more rigorous

Bouldings Lamentation And The Equilibrium Model Of Luca Pacioli: An Examination Of Cross-Disciplinary Misunderstandings

This treatise addresses an interdisciplinary issue addressed by Kenneth Boulding, who lamented the difference in usage of Pacioli accounting model as between economic theorists and accoun-tants. In response, this treatise examines origins of the accounting model, and the evolution of its use are traced. Differences between economists and accountants are examined through the filter of Luca Pacioli bookkeeping model, the flawed foundation upon which all generalizations re-garding accountancy have been based for centuries. The economic nature of financial accounting models is detailed and similarities and differences between theoretical and applied models of financial accounting are examined. Pacioli applied model is re-examined in economic terms befitting its primal nature. The economic meaning underpinning bookkeeping terms is clarified, and the breach between accounting practice and literature and the solid economic reality underlying the accounting process is discussed The mutual misunderstanding which gave rise to Boulding dilemma is placed in its primal context, and requirements for its resolution are suggested.

History-Based Accounting Reform: Using Mathematics Perspective to Identify and Solve Some Main Problems in Accounting Education and Standards

Manuscript Type: Perspective Research Issue: Perceived as a pure social science, prominent accounting scholars agree that the current accounting development overemphasizes on rules, and this has wide negative impacts on accounting education and research. Thus, accounting reform is necessary even though it is still unclear the direction of the reform. Research Findings/Insights: The basic thesis of this study is that accounting is an application of mathematics because accounting was documented in the mathematics book and written by Luca Pacioli as a mathematics professor. Firstly, this study shows the inappropriateness of current accounting teaching methods. Specifically, this study shows that the use of debits and credits is purely the application of mathematics. Secondly, this study identifies the limitation of the definition of financial statement elements, and proposes the alternative redefinition of the elements. Thirdly, this study shows that the use of a mathematical perspective helps accounting profession to solve current accounting issues. Finally, this study proposes the development of three pillars, i.e. mathematics, rules, and art, in a balanced manner to do accounting reform. Theoretical/Academic/Policy Implications: This study provides a “new” perspective that the accounting development is based on the history of accounting itself, i.e. accounting as an application of mathematics. Using the mathematical perspective, not only do accounting scholars improve the accounting education but also we innovate accounting research agenda. In addition, this study offers insights to accounting standard boards interested in developing a global uniform of financial accounting standard that effectively work.

On two long lasting delusions in the history of equations

Almost everybody was thought, that the 9th century Moshlem mathematician al-Khwarismi was the inventor of two powerful methods — called by him as al-jabr and al-muqabala — in solving quadratic equations. The second belief is that between Leonardo’s Liber abaci and Luca Pacioli’s Summa... happened nothing interesting in algebra. We will show that both beliefs are false by giving examples from the antiquity and analyzing Mediaeval Italian manuscripits.

Luca Pacioli: The Father of Accounting Education

Luca Pacioli, was a Franciscan friar born in Borgo San Sepolcro in what is now Northern Italy in 1446 or 1447. It is believed that he died in the same town on 19 June 1517. He is best remembered for his 615-page mathematical compendium, Summa de Arithmetica Geometria Proportioni et Proportionalità, published in 1494; and for his friendship with Leonardo da Vinci. Many accountants perceive his greatest contribution as being the 27-page treatise on double-entry bookkeeping and business contained within his Summa. Today, we still teach doubl-entry bookkeeping following the principles set down by Pacioli, and all manual and computerized accounting systems owe much of their processing logic to the principles and processes he described. However, there is another aspect to this treatise that has been largely overlooked: in it, Pacioli set down not only the principles of double entry bookkeeping but also presented an approach to teaching the subject that is unique and largely forgotten. This paper considers Pacioli's pedagogic approach within the educational environment in which he worked. It concludes that Luca Pacioli was a man of pedagogic insight and expertise who knew how to pitch his presentation so as to engage his students and maximize their likelihood of learning and understanding the material he presented using techniques that, even today, would be considered innovative. In doing so, he brings a subject (double entry bookkeeping) to life that is in sharp contrast to the abstract and often meaningless (in terms of context) way in which it is often taught today.

Using accounting history and Luca Pacioli to put relevance back into the teaching of double entry

Double entry bookkeeping is generally considered to be a topic that students struggle to learn. In part, this is seen as being due to their lacking awareness of both business processes and of the business environment in which accounting operates, which makes double entry appear an abstract concept and one they find hard to justify the effort of learning. It is also seen by many faculties as failing to encourage critical thinking; and as a purely mechanical process that is unnecessary in a university degree in accounting – that it belongs in the professional office where it can be taught in context in the work environment. This paper argues that there is an alternative justifiable view that, far from being unnecessary and failing to encourage critical thinking, knowledge and understanding of double entry is a key element required of anyone who seeks to fully engage in critical thinking concerning the validity of accounting information. It argues that double entry should be retained in the undergraduate accounting curriculum – that its absence from the curriculum encourages blind acceptance of accounting information as ‘truth’ and makes it more difficult to encourage accounting students to think critically about accounting information at later stages of their studies. This paper suggests that by adopting an accounting history-based approach, students can be presented with a context that may overcome their traditional failure to grasp the topic well at an early stage in their accounting studies. To support this claim, the paper suggests themes that could be covered when introducing the topic, suggests sources of teaching material, and offers access to historical background material concerning the ‘father of accounting’, Luca Pacioli, in order to assist faculties that wish to try it for themselves in the classroom.

Český účetní historik a teoretik Hugo Raulich (1866 - 1940)

Medailon připomíná 70. výročí vydání českého překladu Samostatného pojednání č. 11, o účetnictví, z knihy L. Pacioliho Summa de arithmetica, geometria, proportii et proportionalita, vydané v Benátkách roku 1494. Překladatel Hugo Raulich dovršil téměř padesátiletou práci na české verzi v roce 1939 a jeho text vyšel jako samostatná příloha Slovníku obchodně-technického, účetního a daňového v roce 1940. Hugo Raulich několik měsíců po vydání překladu zemřel (19. 10. 1940).

Portrait of Luca Pacioli and Disciple: A New, Mathematical Look

Although the famous Portrait of Luca Pacioli and Disciple is a favorite illustration in surveys of Renaissance history and the history of science and mathematics, little is known about it. A detailed analysis of its contents and cultural context reveals that rather than a simple double portrait, the painting celebrated the achievements of mathematical humanists and their education program. The analytic skills that they championed were based on the visual language of Euclidean geometry. Not surprisingly, the diagrams of the Elements as printed by Erhard Ratdolt (Venice, 1482) are the focus of the picture and its complex iconography.

Using Mathematics to Teach Accounting Principles

As widely acknowledged, Luca Pacioli discussed accounting in his mathematics book Summa de Arithmetica, Geometria, Proportioni et Proportionalita. Using the perspective of mathematics, this paper shows that the majority of available accounting principles literature employs accounting equations positioning the elements of both assets and expenses in opposite accounting equations, rather than placing the two elements in the same side of the accounting equation. More than just offering consistent rationality, the use of mathematics rationality will make it much simpler to explain why the elements of assets and expenses should receive the same treatment in relation to debits and credits. Furthermore, this paper shows that the rules of debits and credits are entirely based on mathematical logics. Finally, this paper proposes the need for learning accounting from the perspective of mathematics, in addition to those of GAAP and engineering skills.

Mathematics in Accounting as a Big Unanswered Question

Mathematics has been employed in accounting for centuries. It was included in the double entry system in the Luca Pacioli’s mathematics book but has not, so far, received appropriate attention in the development of modern accounting. The expanded accounting equation employed nowadays is considered a black-box, and there have been no significant improvements to the equation. This paper outlines the importance of the accounting equation in identifying the limitations of current accounting standards, particularly the definition of the elements of financial statements. Furthermore, this paper argues that the approach employed in the definitions of the elements of financial statements should be on the basis of information-base, instead of the use either the balance sheet or the income statement approach. Finally, the paper suggests that the application of mathematics in accounting be dealt with so that accounting will make a significant contribution to the academic world.

The influence of Amatino Manucci and Luca Pacioli

Luca Pacioli (1494) published the first printed treatise on double entry bookkeeping. Amatino Manucci, as a partner in a Florentine company with branches in the south of France, kept a complex system of accounts (1299–1300) which are thought to be the earliest known to conform to double entry usage. The author considers the work of these two figures in its historical context, and thus their place in the history of double entry bookkeeping. The article was first delivered as a talk at Gresham College on 25 April 2008 as part of the BSHM–Gresham College History of Financial Mathematics meeting.