Luca Pacioli, "A Treatise on Accounts and Records." Luca Pacioli: biography

Accounting is an integral part of the modern economic system. As shown by historical practice, ideas about money and their turnover have an indissoluble connection with the existing economic order. With the development of statehood, it became necessary to systematize and streamline financial transactions. A huge contribution to this task was made by Luca Pacioli - the "father" of accounting. Further we learn what the merit of this mathematician is.

Luca Pacioli: biography

He was born in 1445 in the Apennines, in the small town of Borgo Sansepolcro. As a boy he was sent to a local monastery to study to an artist. In 1464 Luca Pacioli moved to Venice. There he was engaged in the education of merchants' sons. It was at that moment that his first acquaintance with financial activity took place. In 1470, Luca Pacioli (photo mathematics presented in the article) moved to Rome. There he is completing his textbook on commercial arithmetic. After Rome, the mathematician leaves for three years to Naples. There he was engaged in trade, but, apparently, unsuccessfully. In 1475-76, he took his veil and joined the Franciscan Order. From the 1477th, Luca Pacioli taught for 10 years at the University of Perugia. During his work, his ability to teach was repeatedly marked by salary increases. Working in the university, he created the main work, one of whose chapters was "A Treatise on Records and Accounts."

In 1488, the mathematician left the pulpit and went to Rome. For the next five years he was in the state of Pietro Valletari (bishop). In 1493 Pacholi moved to Venice. Here he prepared his book for publication. After a year's rest, Pacioli took the chair of the University of Milan, where he began to teach mathematics. Here he meets Leonardo da Vinci and becomes his friend. In 1499 they moved to Florence. There Pacioli taught two years of mathematics. After that, he goes to Bologna. In this city, almost half of the local budget went to the maintenance of the university. Adopting mathematics for such a profitable and prestigious position speaks of his recognition.

A few years later, a piece of the book, written by Luca Pacioli, "A Treatise on Accounts and Records" is published in Venice. The date of publication of this work is 1504. By 1505, the mathematician had practically retired from teaching and moved to Florence. But in 1508 he again went to Venice. There he gave public lectures. However, his main occupation was at that time the preparation for the publication of his translation of Euclid. In 1509 another book was published, which was written by Luca Pacioli, "On the Divine Proportion." In 1510, the mathematician returned to his native city and became a priory in the local monastery. However, his life was burdened by numerous intrigues of envious persons. This was the reason that four years later he again went to Rome. There he taught at the Mathematical Academy. In his hometown Luca Pacioli returned already shortly before his death - in 1517.

The contribution of mathematics to the development of methodology

In order to fully understand the significance of the book written by Luca Pacioli (The Treatise on Accounts and Records), it is necessary to assess the principles that he put into the system. Almost all experts say that the criteria proposed by the mathematician existed before him. For example, it can not be assumed that Luca Pacioli is the author of a double entry. It existed before him. In this case, the question arises: what is the contribution of mathematics in this case? In contrast to his contemporaries, Pacioli believed that all the most important was already invented earlier. The main task of scientists he saw in the most effective construction of the training course. Pacioli did not imagine scientific creativity beyond the pedagogical process. Therefore, teaching became an integral part of his life.

The ideas that Luca Pacioli had had completely determined his scientific approach both to solving mathematical problems and related disciplines. This position was defined quite accurately later by Galileo. Luke Pacioli's knowledge of mathematics was closely connected with the study of the harmony of the world. At the same time, the correctness of geometric figures, as well as the convergence of the balance, became for him manifestations of this harmony. The scientist did not simply record those practices that existed earlier, but gave them a scientific description. This is the main significance of the activities carried out by Luca Pacioli. "Treatise on accounts and records", thus, became the foundation for the improvement of the balancing system.

The essence of the scientific approach

Reflection of facts at the time of their existence is the most accurate. But along with this, this method does not contribute to the further development of practices, since the method of cognition is focused on the past, the exact reproduction of what has already taken place and takes place. The approach used by Luka Pacioli made it possible to assess the situation not only on the segment of its development, but also in the future, and also on the part of system and integrity. In his work, the mathematician did not take much into account, made a number of mistakes, described a more outdated Venetian system, and not a progressive Florentine one. Nevertheless, the "Treatise" by Luka Pacioli showed that in the preparation of financial statements, a scientific approach can be applied. He was able to transform the formation of balance in one of the directions of the exact sciences. This, in turn, served to the fact that many people (Leibniz, Cardano and others) became interested in accounting theory.

Introduction of mathematical system

In his "Treatise" Pacioli supplemented the existing methods with ideas about combinatorics. In the preparation of the balance at that time, fractions were used because of the simultaneous use of several currencies. But during the operations they were simply rounded. However, the main contribution of the mathematician to the methodology is considered to be his introduction of the idea of the integrity of the accounting system and that convergence of the balance acts as a sign of its harmony. The latter definition was considered at that time not only as an aesthetic, but also an engineering category. Evaluation of the trade balance from this position made it possible to present the enterprise in the form of an integrated system. The method that Luka Pacioli perfected - a double entry - in his opinion, should have been applied not only for a certain trading enterprise, but for any organization and for the entire economy as a whole. This allows us to conclude that the approach that the mathematician was implementing predetermined not only the development of financial reporting, he became the foundation for the formation and subsequent implementation of economic thought.

Luca Pacioli: "A Treatise on Accounts and Records" (summary)

First of all, it should be said that the financial balance of the mathematician is presented in the form of a strictly ordered sequence of operations. The most complete reflection of "procedural" is seen in the principle of maintaining three books of accounting. The first - "Memorial" - reflects the chronological sequence of all cases. The sixth chapter of the Treatise describes the procedure for its conduct. Over time, the Memorial was replaced by primary documents. As a consequence, there was an inconsistency between the dates of discharge, the commission of the operation and the registration of the fact.

The next book is "The Journal". It was intended solely for internal use. It recorded all the operations that were described in the "Memorial", but they took into account their economic meaning (loss, profit, and so on). It was intended for posting and was also compiled in chronological order. The third book was "Home". About it is told in chapter 14 of the "Treatise". In her operations were recorded in a systematic, rather than a chronological order.

Clarity

This is the following principle, which was described by Pacioli. Clarity meant providing users with understandable and complete information about the economic activity of the enterprise. All entries in books, in accordance with this principle, should be drafted in such a way that conceptual reconstruction is envisaged in them. In other words, operations must be fixed so that it is possible later to restore participants in the act, objects, time and place of commission of the fact. To achieve the greatest clarity, you need to know the language of accounting. The mathematician used the Venetian dialect when writing the book, everywhere used mathematical concepts. It was Pacioli who formed the prerequisites for the creation of the accounting language, which was the most understandable for most Italian financiers.

Separate property of the owner and enterprise

This principle was quite natural for that time. The fact is that many merchants then acted as the sole owners of the enterprise, managers and recipients of losses and profits from trading activities. In accordance with this, the accounting is carried out in the interests of the owner of the firm. However, in 1840, Hippolytus Wannier formulated another approach. In accordance with it, accounting is conducted not in the interests of the owner, but of the firm. This approach reflected the spread of the share capital in the broad masses.

Credit and debit

One of the most important principles of Pacioli was a double entry. The mathematician held the position that every business transaction should be reflected in both debit and credit. This approach has the following objectives:

1. Control over the correctness of recording the facts of economic activity.
2. Establishment of the owner's equity without inventory.
3. Definition of financial result.

In his work Pacioli paid much attention to the first task. However, the second and third remained undeveloped. This leads to the formation of a method that distorts the correctness of turnover. The fact is that Pacioli was primarily a scientist, and then a financier, therefore he considered a double entry system within the bounds of cause and effect. In the debit, presumably, the mathematician saw the cause, and in the credit - the consequence. This way of considering the financial system was primarily used in the economy. The most capacious formulation of this principle was given by Yezersky: there can be no income without expense. As the main aspects of the dual recording, Pacioli took the following:

1. The amount of debit turnover will always be the same as the amount of credit.
2. The value of the debit balance will always be the same as the value of the credit balance.

These principles subsequently became widespread in accounting systems.

Subject of reporting

As it, Pacholi was performing the contract of sale. The reduction of all agreements to a document of this kind was quite typical for that time. Undoubtedly, today's variety of forms of economic life can not fit into the framework of the concept of buying and selling (for example, netting, barter, debt restructuring and so on). However, in the time of Pacioli this idea was very progressive. In addition, such an approach allowed to form an adequate for that period definition of the value of both not only a fair price, but also a consequence of the cost and market situation.

Principle of adequacy

Its essence lies in the fact that all the costs incurred by the enterprise are correlated with the revenues received by it over time. The principle of adequacy Pacioli provides rather than introduces directly and explicitly. As income, only received money is considered. At that time, the notions of profitability and depreciation had just begun to form. In a complex, all this contributed to the creation of ideas about both monetary and other forms of profit. In accordance with a new understanding of income, it can be said that it is formed not only as a result of economic transactions, but also as a result of applying accounting methodology.

Balance Management

Pacioli considered accounting something self-valuable, in this regard, the value of the results of reporting acted as a relative term. The results recorded in this or that book depend in many respects on the reporting method. This provision is consistent with the idea of the most accurate recording of economic transactions in the balance sheet, since all methods presuppose a fairly accurate reflection of facts, while conclusions can often be directly opposite. Pacioli understood this perfectly. In this regard, as the main result of financial reporting, he saw his impact on decision-making in the field of economic management.

Honesty

This is the last principle, which proclaimed Pacioli in his "Treatise". The person who is engaged in balancing the balance must be absolutely honest. This should be manifested not only in relation directly to the employer itself. The accountant should be mostly honest with God. In this regard, the reliance on him almost in every chapter for a mathematician is neither a tribute to tradition, nor the fulfillment of a monastic duty, but the main life principle. Conscious distortion of accounting information Pacioli considered not only a financial violation. For a mathematician, this was primarily a disorder of divine harmony, which he sought to comprehend through calculations.

Disadvantages of work

It should be said that Pacioli's work was primarily a theoretical book. In this regard, it does not reflect the many elements of financial reporting that existed at that time. Among them, in particular, are:

1. Maintenance of additional and parallel books.
2. Accounting for industrial costs.
3. Balance keeping with analytical purpose. At that time, reporting was already being carried out not only for reconciling information and closing books, but also acted as a management and control tool.
4. Account management nostro and loro.
5. Basis of audit and the procedure for checking the balance.
6. Methods of calculation concerning the distribution of profits.
7. The procedure for reserving funds and distribution of results for related periods.
8. Confirmation of accounting information by inventory methods.

The absence of these components indicates, in the first place, the lack of commercial experience of Pacioli. It is likely that he did not include the given details due to the fact that they simply did not fit into the whole system created by him.

Finally

Pacioli's work has become one of the first, in which the Italian language is used as a means of expressing the scientific idea. Principles and categories formed by a mathematician, find application at the present time. The main merit of Pacioli is not that he fixed them, because it would have been done so. His contribution is that it was thanks to his book that accounting was elevated to the status of science.