About 500 years ago, Luca Pacioli—the “Father of Accounting”, a mathematician and merchant wrote the first surviving accounting textbook on double-entry accounting – “The Summa”.
His system included most of the accounting cycle as we know it today.
He described the use journals and ledgers, and he warned that a person should not go to sleep at night until the debits equaled the credits!
His ledger included assets (including receivables and inventories), liabilities, capital, income, and expense accounts.
He demonstrated year-end closing entries and proposed that a trial balance be used to prove a balanced ledger.
Also, his treatise alludes to a wide range of topics from accounting ethics to cost accounting.
Perhaps most surprising is how little bookkeeping methods have changed since then & describe procedures that would be recognized by modern accountants.
The principal differences between modern bookkeeping practices are refinements made necessary to accommodate the greater size of contemporary business enterprises than existed in Pacioli’s time.
Debit – Comes from the Italian “debito” which comes from the Latin “debita” and “debeo” which means: OWED TO the proprietor or an asset of the proprietor.
Credit – Comes from the Italian “credito” which comes from the Latin”credo” which means: Trust or belief (in the proprietor) or OWED BY the proprietor.
