The most well-known Italian mathematician was Fra Luca Bartolomeo de Pacioli, or simply known as Luca Pacioli. Pacioli has done a lot of studies and made a lot of contributions to the field of accounting. He is regarded as “The Father of Bookkeeping and Accounting” in Europe. He wrote a book that explains the double-entry accounting system in detail.
However, Pacioli never claimed to have invented double-entry bookkeeping and never asserted to have done so. He credited Benedetto Cotrugli with inventing the method, as he depended on an unpublished work by Cotrugli for the accounting section of his own Summa.
Nonetheless, Pacioli’s presentation of the approach was extremely significant in the context of accounting because it was one of the first large-scale demonstrations of double-entry bookkeeping.
The principle behind double-entry accounting or bookkeeping is that every business transaction causes two financial changes in the organization. Using particular principles known as “rules of debit and credit,” these adjustments are recorded as debits or credits in multiple different accounts. Each debit entry must have a matching credit entry, and every credit entry must have a matching debit entry in a double-entry system.
The concept was to segregate one entity’s resources from other entities’ claims on those resources. Creating a balance sheet with separated debits and credits was the most basic form of this. This idea streamlined bookkeeping and provided a more accurate view of a company’s overall health.
The Advantages of the Double Entry System
- The profit and loss for the year may be computed with accuracy.
- Applying this system allows the organization to keep detailed accounting records, which aids in control.
- This system delivers statistical business data that can be used to improve the company.