Paciolo and Modern Accounting

In: Business and Management

Submitted By bbuechel
Words 610
Pages 3
* First bookkeeping book printed in 1494 – very little change to bookkeeping * Since emergence of record keeping similar to banks and governments were applied to mercantile affairs, bookkeeping has possessed theory, form, and technology * Ancient theory in bookkeeping was inferred * Double entry arose from a certain methodology – double posting passed the test of mechanical accuracy. It is a fact that every transaction has dual aspect * System of debits and credits was used in ancient times – rise of proprietor and proprietorship allowed use of all financial elements of trade rather than just a system of record keeping * Paciolo showed no theory behind the ‘canceling out’ of debits and credits and the journal entry that followed, however he shows strong consciousness by closing accounts to profit and loss, and then closing those to capital * So consistent but did not dwell on theoretical explanation
Similarities to Modern Accounting * Paciolo used ‘subtraction by opposition’ – creditors placed on right side, and debtors on left side * Characteristic technology very similar to today – in debit and credit ledger, ‘de dare’ and ‘de havere’ (shall give, shall have) appeared, also ‘per’ (by) and ‘a’ (to) were used to indicate a debit and a credit, respectively * Transactions were listed like the following, ‘by cash to capital’ – today, we dropped the use of the words, and use indentions for credits * P. also made use of a trial balance – ‘you shall summarize…all the debit items of the ledger….and summarize all credit items….’ * P. used similar rules and the same sequence of bookkeeping operations – methodology is the same in ancient times as modern times * P. used same opening inventory method – list on a sheet of paper everything you own, starting with the most valuable and easiest to lose (liquidity) *…...

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