Concepts
Double-Entry Bookkeeping
Also Known As Double-Entry Accounting
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An accounting method that records each transaction as both a debit and a matching credit so that the books balance and every change in one account is traceable to an offsetting change in another. Merchant bankers in Genoa, Florence and Venice were using the method in daily practice by the fourteenth century, and it was first systematically set out in print by the Franciscan friar Luca Pacioli in his 1494 Summa de Arithmetica, Geometria, Proportioni et Proportionalita. The Medici Bank's own branch partnerships used it to keep each branch's ledger separately auditable, a bookkeeping discipline that let the whole firm track profitability across cities without a single central account, and the method remains the structural basis of financial accounting today.
Facts
FieldAccounting, Economic History 1 Proposed ByPacioli codified a practice merchant bankers in Genoa, Florence and Venice were already using daily by the fourteenth century; he did not invent it, he was the first to set it out systematically in print. SignificanceThe method lets every change in one account be traced to an offsetting change in another, maintaining accuracy in financial records and allowing errors or fraud to be detected; it remains the structural basis of financial accounting today. 2 Cross-Tradition Connections
Sources
1. The New Palgrave Dictionary of Economics
Palgrave Macmillandouble-entry bookkeeping
2. Wikipedia
Wikimedia FoundationHistory sectionQuote, History section
Luca Pacioli, a Franciscan friar and collaborator of Leonardo da Vinci, first codified the system in his mathematics textbook Summa de arithmetica, geometria, proportioni et proportionalita published in Venice in 1494.
2. Wikipedia
Wikimedia FoundationPurpose sectionQuote, Purpose section
The purpose of double-entry bookkeeping is to maintain accuracy in financial records and allow detection of errors or fraud.
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