The humble Indian बहि खाता - the accounting book of yesteryear’s -
whose history predates, by several centuries, the modern day double
entry accounting system introduced to the world by an Italian
mathematician Monk, Luca Pacioli during the Renaissance period, gained
national headlines and from near obscurity, the बहि खाता hit the front
pages of most of the print and electronic media. Mrs Nirmala
Seetharaman, the first women Finance Minister of India, in a major
departure from the past colonial tradition and practise - where the
Finance Ministers, in different governments, carried a briefcase to
present their budget- sported her budget documents in the red silk bag,
the बहि खाता, with the national emblem, for presenting her maiden budget
on the 5th of July. While many praised her for dumping the colonial
past, few others dubbed it as gimmick. For me, however, a science
communicator with limited knowledge in commerce and accountancy, it
evoked an interest in knowing more about the double entry accounting
system the बहि खाता and Luca Pacioli’s contributions to the modern day
accounting system in a globalised market economy.
My interest primarily stemmed from the fact that very recently, I had an opportunity to be a member of a panel discussion ‘Leonardo Da Vinci : The intersection of Philosophy and Science’, which was organised by Avid Learning and the Italian Embassy to commemorate the 500th death anniversary of Leonardo Da Vinci. While researching on the subject, I came across scores of published material, which majorly advocate that Luca Pacioli, a very close companion and associate of Leonardo Da Vinci, is credited with introducing the double entry accountancy system and is referred to as the father of modern accounting.
Although Luca Pacioli is universally considered as the father of modern day double entry accounting, primarily because of his monumental work Summa, which was printed in 1494, there is fair amount of recognition that the ancient system of Indian accounting - the बहि खाता - predates Pacioli. The बहि खाता, some scholars like Lal Nigam argues, is a double-entry system of bookkeeping that was used and continues to be used in India and it predates Pacioli’s Summa by several centuries. Its existence in India, prior to the Greek and Roman empires, suggests that Indian traders may have taken this system with them to Italy and from there the Pacioli’s book helped the double-entry system spread through Europe. The plausibility of this argument gets strengthened when one looks at the spread of the Hindu Numerals and the decimal place value system to the western world through the Arab world.
Although the legendary Indian बहि खाता may have had some merits to its fame, yet global scholars majorly credit Pacioli for introducing double accounting system to the world. Luca Pacioli, a close associate of the par excellence genius, and a symbol of the Renaissance- Leonardo Vinci - introduced the concept of double accounting system to the Italian Businessmen, through his famous treatise, ‘the Summa de Arithmetica Geometria, Proportioniet Proportionalita’ meaning “Everything about Arithmetic, Geometry and Proportion”. This book, written as a guide to existing mathematical knowledge, covered five topics including book keeping, for which there were 36 short chapters. This book is regarded as the official beginning of the double entry bookkeeping.
Interestingly enough the first edition of this book, printed in 1494, was auctioned by the Christie’s in New York just last month and this original book fetched a whopping 1.3 million US $ from an anonymous buyer. This book contains mathematical principles of most vital features of the contemporary finance. Luca Pacioli and Leonardo Da Vinci were both a product of the Renaissance and the former was a mathematical genius. Leonardo was more inclined towards military engineering, while Luca towards abstract and pure math. When Pacioli included - Double Entry Bookkeeping, little did he know that he would change the world. Luca's math textbook contained the basic notions that accountants follow today: Assets equal liabilities plus owner's equity (A=L + OE). This system of modern day double entry bookkeeping is the origin of all subsequent book-keeping treatises throughout Europe.
Luca Pacioli, a mathematician monk, was a companion and a friend cum associate of Leonardo Da Vinci. Leonardo learnt his mathematics from Pacioli and he also contributed a lot of drawings for Pacioli’s monumental book “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. The outstandingly elegant mathematical proportions that one witnesses in Leonardo Da Vinci’s Last Supper painting and so also in the Vitruvian Man and his other works owe their genesis to his understanding of mathematics, particularly the ratios and proportions including the divine or the golden ratios that are exemplified in most Gothic architecture. The legendary Leonardo considered Pacioli as his math teacher. In one of his writings, in the to do list, Leonardo reminds himself "Learn multiplication from the root from Maestro Luca”. Luca Pacioli’s book mainly deals with arithmetic and geometry. In one of the small chapters in his monumental book, Pacioli describes the double-entry accounting system, which has entered into the annals of commerce and accountancy and is considered as one of the most influential works in the history of accountancy and capitalism. It was during this period the Gutenbergs printing press had been invented and Pacioli’s book was printed on the new Gutenberg press. This book became an instant hit among the Businessmen and a whopping 2000 copies of this book were printed and the book was also widely translated, copied, and plagiarised across Europe.
Pacioli’s description of double-entry bookkeeping is critical in the development of the accounting profession as we know it today. Pacioli included all of the mathematical knowledge available at the time and this was also the period when the Renaissance thinkers adopted and synthesised Hindu-Arabic mathematics with rediscovered ancient Greek concepts. With the fall of the Constantinople, a large number of mathematicians and other scholars, artists and thinkers migrated from Istanbul to Italy a land which provided an excellent ambience and encouraged free thinking. It is therefore no wonder that these people may have carried with them the Hindu decimal place value number system and other mathematical practices including the the Indian accounting system of बहि खाता, to Florence, Italy.
Pacioli’s Somma was a large and serious undertaking, which took about a year to print in its entirety. This treatise was targeted as an worthy investment for savvy merchants and businessmen, who would make a return through its use and it went on to be the most widely used mathematical text in Italy for 50 years after its publication. Interestingly enough, Pacioli applied for a 20-year copyright extension in 1508 for his book. This evidences the importance and influence of Pacioli’s work, which informed generations of merchants on the basic tenets of bookkeeping, fast calculation, and arithmetic. Professor Ingrid Rowland, daughter of a Chemistry Nobel laureate and a frequent contributor to the New York review of books, writes that this book “may be the most elegant and compendious of all vernacular manuals.Neither a simple primer nor a tome for the learned, the Somma was a serious work made to meet the demand of the burgeoning classes of businessmen, artists, artisans, and merchants in Renaissance Italy”.
Pacioli’s double entry system of accounting envisaged that business transactions of each entry is to be recorded twice – first as a debit and second as a credit. This system was originally developed to reduce mistakes associated with bookkeeping and at the end of the day it was expected that the sum of the debit side should be equal to that of the credit side otherwise, something must have gone wrong somewhere. Luca Pacioli by his ingenious explanation of Double Entry Bookkeeping system made possible modern day international commerce, which eventually led to the opening of the flood-gates to what today we call "The Global Economy." Long live the बहि खाता, and Luca Pacioli.
My interest primarily stemmed from the fact that very recently, I had an opportunity to be a member of a panel discussion ‘Leonardo Da Vinci : The intersection of Philosophy and Science’, which was organised by Avid Learning and the Italian Embassy to commemorate the 500th death anniversary of Leonardo Da Vinci. While researching on the subject, I came across scores of published material, which majorly advocate that Luca Pacioli, a very close companion and associate of Leonardo Da Vinci, is credited with introducing the double entry accountancy system and is referred to as the father of modern accounting.
Although Luca Pacioli is universally considered as the father of modern day double entry accounting, primarily because of his monumental work Summa, which was printed in 1494, there is fair amount of recognition that the ancient system of Indian accounting - the बहि खाता - predates Pacioli. The बहि खाता, some scholars like Lal Nigam argues, is a double-entry system of bookkeeping that was used and continues to be used in India and it predates Pacioli’s Summa by several centuries. Its existence in India, prior to the Greek and Roman empires, suggests that Indian traders may have taken this system with them to Italy and from there the Pacioli’s book helped the double-entry system spread through Europe. The plausibility of this argument gets strengthened when one looks at the spread of the Hindu Numerals and the decimal place value system to the western world through the Arab world.
Although the legendary Indian बहि खाता may have had some merits to its fame, yet global scholars majorly credit Pacioli for introducing double accounting system to the world. Luca Pacioli, a close associate of the par excellence genius, and a symbol of the Renaissance- Leonardo Vinci - introduced the concept of double accounting system to the Italian Businessmen, through his famous treatise, ‘the Summa de Arithmetica Geometria, Proportioniet Proportionalita’ meaning “Everything about Arithmetic, Geometry and Proportion”. This book, written as a guide to existing mathematical knowledge, covered five topics including book keeping, for which there were 36 short chapters. This book is regarded as the official beginning of the double entry bookkeeping.
Interestingly enough the first edition of this book, printed in 1494, was auctioned by the Christie’s in New York just last month and this original book fetched a whopping 1.3 million US $ from an anonymous buyer. This book contains mathematical principles of most vital features of the contemporary finance. Luca Pacioli and Leonardo Da Vinci were both a product of the Renaissance and the former was a mathematical genius. Leonardo was more inclined towards military engineering, while Luca towards abstract and pure math. When Pacioli included - Double Entry Bookkeeping, little did he know that he would change the world. Luca's math textbook contained the basic notions that accountants follow today: Assets equal liabilities plus owner's equity (A=L + OE). This system of modern day double entry bookkeeping is the origin of all subsequent book-keeping treatises throughout Europe.
Luca Pacioli, a mathematician monk, was a companion and a friend cum associate of Leonardo Da Vinci. Leonardo learnt his mathematics from Pacioli and he also contributed a lot of drawings for Pacioli’s monumental book “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. The outstandingly elegant mathematical proportions that one witnesses in Leonardo Da Vinci’s Last Supper painting and so also in the Vitruvian Man and his other works owe their genesis to his understanding of mathematics, particularly the ratios and proportions including the divine or the golden ratios that are exemplified in most Gothic architecture. The legendary Leonardo considered Pacioli as his math teacher. In one of his writings, in the to do list, Leonardo reminds himself "Learn multiplication from the root from Maestro Luca”. Luca Pacioli’s book mainly deals with arithmetic and geometry. In one of the small chapters in his monumental book, Pacioli describes the double-entry accounting system, which has entered into the annals of commerce and accountancy and is considered as one of the most influential works in the history of accountancy and capitalism. It was during this period the Gutenbergs printing press had been invented and Pacioli’s book was printed on the new Gutenberg press. This book became an instant hit among the Businessmen and a whopping 2000 copies of this book were printed and the book was also widely translated, copied, and plagiarised across Europe.
Pacioli’s description of double-entry bookkeeping is critical in the development of the accounting profession as we know it today. Pacioli included all of the mathematical knowledge available at the time and this was also the period when the Renaissance thinkers adopted and synthesised Hindu-Arabic mathematics with rediscovered ancient Greek concepts. With the fall of the Constantinople, a large number of mathematicians and other scholars, artists and thinkers migrated from Istanbul to Italy a land which provided an excellent ambience and encouraged free thinking. It is therefore no wonder that these people may have carried with them the Hindu decimal place value number system and other mathematical practices including the the Indian accounting system of बहि खाता, to Florence, Italy.
Pacioli’s Somma was a large and serious undertaking, which took about a year to print in its entirety. This treatise was targeted as an worthy investment for savvy merchants and businessmen, who would make a return through its use and it went on to be the most widely used mathematical text in Italy for 50 years after its publication. Interestingly enough, Pacioli applied for a 20-year copyright extension in 1508 for his book. This evidences the importance and influence of Pacioli’s work, which informed generations of merchants on the basic tenets of bookkeeping, fast calculation, and arithmetic. Professor Ingrid Rowland, daughter of a Chemistry Nobel laureate and a frequent contributor to the New York review of books, writes that this book “may be the most elegant and compendious of all vernacular manuals.Neither a simple primer nor a tome for the learned, the Somma was a serious work made to meet the demand of the burgeoning classes of businessmen, artists, artisans, and merchants in Renaissance Italy”.
Pacioli’s double entry system of accounting envisaged that business transactions of each entry is to be recorded twice – first as a debit and second as a credit. This system was originally developed to reduce mistakes associated with bookkeeping and at the end of the day it was expected that the sum of the debit side should be equal to that of the credit side otherwise, something must have gone wrong somewhere. Luca Pacioli by his ingenious explanation of Double Entry Bookkeeping system made possible modern day international commerce, which eventually led to the opening of the flood-gates to what today we call "The Global Economy." Long live the बहि खाता, and Luca Pacioli.
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