HISTORY OF ACCOUNTING // FATHER OF ACCOUNTING

YT Link: https://youtu.be/OoTc3wLTqkk

It was a time like no other. A time when human vision changed focus and the world was
viewed from new perspectives. From out of the dark ages came enlightenment. From out of the
darkness, light, dimension, depths, invention. It was a time when the writer lent words to the
scientist; the mathematician gave proportion to the artist. It was the Renaissance. The rebirth. A
time when science fueled art and art launched the imagination. And behind it all were the
Renaissance men. Many well-known. Others unsung heroes who still touch our lives more than
500 years later. Unsung heroes like Luca Pacioli. Most of us don't know who he is but all of us
depend on what he's given us. He's the father of accounting as we know it. The unsung hero of
the Renaissance. And this is his story. To understand who Luca Pacioli is. Understand where he
came from. Here where his life began over 500 years ago, in the Italian province of Tuscany in
the small quiet town of San Sepulchral. Today there are adding machines in San Sepulchral, fax
machines, computers. But back in 1445, when Luca Bartolomeo Pacioli was born here,
accounting was neither an art nor a science but Pacioli's destiny was to make it both. As a child,
Luca Pacioli played on these same cobblestone streets that we walk on today. Perhaps right here
where this plaque now honors him. His family was poor. His future predictably unpromising.
Until the boy grew into a young man determined to redirect his life. Little did he know, did
anyone know, that this young man would one day alter the course of global economic history.
The cultural Renaissance of Luca Pacioli's time was fueled by an economic Renaissance.
Business was booming and this allowed the arts to flourish. Luca saw this connection and
realized that the two were to be taken beyond renaissance italy that the mechanisms of commerce
had to be put to paper taken to the Europe taken to the rest of the world. This was Luca Pacioli's
contribution. Luca Pacioli was an important figure in the Renaissance and his life and work
underlines the essential interrelationship between art, business and science of his time. Without
this relationship, the Renaissance could not have taken place. The success of the personal
computer industry and Microsoft is based on the spreadsheet and the spreadsheet is a direct
evolution of the double-entry system published by Luca Pacioli. At the time of Pacioli's youth, it
was uncommon for anyone but the wealthy or the noble to continue their education beyond the
age of 16. So Pacioli did what was expected of him but not for long. In the Franciscan monastery
in San Sepulchral, he took his religious and mercantile training from the friars. Then he was
apprenticed to a local businessman as most young men were. And that's when Pacioli decided to
take a different path. One that brought him closer to the subject he loved, mathematics. I have
been interested in the science and theology of mathematics for as long as I can remember. It was
this interest that led Pacioli to abandon his apprenticeship and take a bold step in a new direction.
A step that would change his life and work forever. Pacioli was invited to study with the
renowned early Renaissance painter Piero della Francesca right here in San Sepulchral. Piero
was more than 25 years older than Pacioli yet he saw great promise in the boy. And Pacioli saw
his mentor as one who could unlock doors of knowledge and experience that might otherwise
stay close to him. To get on in life, make your friends among older persons for only they are in
value of placing you among people of consequence. Piero della Francesca, with a Latin scholar, a
poet and a cosmographer, he wrote books on perspective and for dabbled in architecture. And his
painting, his frescoes, were a marvel of tone and mathematics; with heads and limbs as variations
of geometric shapes, cones, spheres, cylinders. a brilliant mathematician, Francesca shared all he
knew about the art of the science with the young Luca Pacioli. Piero introduced Pacioli to his
work and to his friends. Grazia, salute. That's how one learned in Pacioli's time. Together, the
teacher and his student travelled over the rugged Apennine mountains to the spectacular library
of Duke Federico of Urbino. Pacioli was as impressed by his travels to the library as he was by
the more than 4,000 books in it. And the friendship he developed with the Duke's son Widow
Baldo was one that prompted Pacioli to later dedicate his most famous treatise to the young
Duke. It was Piero della Francesca, the king of painting, who introduced me to Federico, Duke of
Urbino, his son, Widow Baldo and their magnificent library. And it was through Piero that I best
developed the idea to bring mathematics out of the library and to put it to practical daily use.
Exchanging ideas, sharing information and making introductions is what shaped the lives of the
Renaissance men, including Pacioli. The next important introduction, Piero della Francesca gave
young Luca Pacioli was to the early Renaissance writer and architect, Leon Battista Alberti. A
new mentor and teacher who opened yet another door for Pacioli. A door that led out of San
Sepulchral to the glory of Venice. Leon Battista Alberti was a writer and an architect, an artist
and a scientist. Author of famous treatises on sculpture, painting and architecture. Alberti
believed in the religious significance of numerical ratios. What he called the god-given validity
of mathematically determined proportions which he applied to his own work. Proportions that
shaped the columns, arches, foundations of the Renaissance. It was a Leon Battista Alberti that
arranged for Pacioli's first teaching assignment over there on the island of Judaica, in the home
of a wealthy Venetian businessman, Sir Antonio de Rompiasi, where the young Pacioli was to
tutor the three Rompiasi boys. Within a paternal and paternal shadow, I found shelter in their
house. In Venice, Pacioli divided his time between tutoring the Rompiasis', teaching and
studying mathematics with the scholar Dominico Bragandino. He also visited a university
environment for the first time, the University of Padua. all the influences in his life now came
together as the twenty-year-old Pacioli wrote his first manuscript on algebra dedicated to his first
students in Venice, the Rompiasi brothers. And when the elder Rompiasi died in 1470, Pacioli
left Venice to rejoin his aging mentor Leon Battista Alberti. The two soon moved to Rome where
Alberti introduced his young protégé to a most important man. Pope Paul II who encouraged
Luca Pacioli to take the cloth and Alberti also encouraged Pacioli to take his work to the
workplace. Leon Battista Alberti urged me to bring my work to more people by writing in
Italian; to apply my mathematical concepts and techniques to the marketplace, to write in the
more common Italian so every man can understand what is in the mathematician's mind. And so
the boy Pacioli grew into a man with a strong desire to teach. And the belief that mathematics,
art, and architecture are visible examples of divine proportion, divinely inspired. And when his
friend Leon Battista Alberti died in 1472, Pacioli took the Pope's suggestion and took the vows
of the Franciscan Order. So Luca Pacioli, the mathematician, became a monk. He did the
purpose of every merchant to make an honest and a legitimate profit for his living and wherefore
they must begin all their transactions in the name of God and put his holy name on every account
for the praise and the glory of God. In 1475, Pacioli, the monk and the mathematician, became
the teacher and the scholar. The first lecture to hold a chair in mathematics at the University in
Perugia, Pacioli stressed again and again the importance of putting theory to practical use — a
principle that would guide his life and his teachings. Pacioli's emphasis on the application of
theory made him unique among his peers. Traveling and teaching for the next two decades,
Pacioli became the 15th century equivalent of a full professor while delivering lectures, meeting
with popes, writing manuscripts and taking time out to pose for portraits like Piero della
Francesca's the Madonna of the egg. By the time he was 49 years old, Pacioli the mathematician,
monk, teacher, scholar and author would also become a celebrity. With the publication of his
Summa, Pacioli's place as a major intellectual figure of the Renaissance was guaranteed. The
Summa was so important. It was one of the first documents chosen for printing here in Venice by
the new Gutenberg press. Today, nearly five centuries later, the Gutenberg printed Summa
retains its color, texture and clarity. Its full title speaks of a book about mathematics; the
collected knowledge of arithmetic, geometry, proportions and proportionality. But just one small
section within the book is what changed the future of business and economics forever. It's the
section that earned Pacioli the title, father of accounting. Through the Summa, Pacioli became
the catalyst that launched the past into the future; lifting the curtain on the economics of the Dark
Age and lighting the way to unprecedented economic growth and change. What Pacioli explains
in the Summa is how to use double entry accounting to record business transactions. The
Venetian or double entry method may seem commonplace today but when Pacioli presented it it
was state of the art. Assets equal liabilities plus owner's equity. A simple equation and yet the
essence of double-entry accounting. Carried and copied through the centuries, the summa was
translated into Dutch, German, French, English, and Russian. The summa has been a textbook
for teachers, a manual for merchants. It's been hailed as a masterpiece by students of business,
geometry and proportion and considered by some to be the most widely read mathematical work
in all of Italy. But not just for the mathematics it contains, for the Summa is also a compendium
of common business sense. From my association with merchants in various places, I have
learned three things necessary to make a merchants successful; the first and most important is
cash but when merchants do not possess cash they resort to the use of credit — doing business on
the basis of good faith, second it is necessary for a merchant to be a ready mathematician, and
third a merchant must be a good bookkeeper to keep his Affairs in an orderly way because where
there is no order there is confusion. After the Summa was published, one artist was so impressed
by it. He requested Pacioli tutor him in mathematics and proportion here at the court of Milan.
That artist was Leonardo da Vinci. And during the time Leonardo and Pacioli were together, two
works of art became masterpieces. One of those was the Divina proportione, of divine
proportions. The second major treatise on mathematics written by Luca Pacioli and illustrated by
Leonardo da Vinci. The order in figure of this book, together with all the other bodies, are from
the hand of our compatriot Leonardo da Vinci of Florence whose designs and figures no man
could ever surpass. The second masterpiece completed during Leonardo and Pacioli's
collaboration was a mural painted on the north wall of the refectory of Santa Maria delle grazie,
a Dominican cloister here in Milan. It was to become the most famous painting of the 15th
century. The Last Supper by Leonardo da Vinci, a work that embellished the advances in
perspective and proportion Pacioli wrote about in his Summa advances that he shared with
Leonardo, Hachi Ali's name is mentioned frequently in Leonardo's notes. While living in Milan
here in the monastery of San Souci Channel, Pacioli had a substantial influence on the divine
geometry Leonardo was known for, especially in the Last Supper. The relationship between
Leonardo and Pacioli which lasted seven years was a symbiotic one, a give-and-take. Pacioli
shared Piero della Francesca's knowledge of perspective with Leonardo. Perhaps even helping
Leonardo make the transition to architecture and Leonardo shared his abilities with Pacioli
illustrating of divine proportions where Pacioli calculates and constructs a system of classical
Roman letters. Pacioli's artistic vision with help from the gifted hand of Leonardo daVinci.
collaboration is what the Renaissance was all about. Exchanging ideas, sharing discoveries,
melding mathematical principles with artistic ones; the science of art, the art of science and
accounting. During and after his time with Leonardo daVinci, Pacioli continued to teach and
write. Completing some 11 books on algebra, geometry, mathematics, military strategies, chess,
magic squares, cardgames and accounting. By the 16th century, Pacioli had become a legend in
his own time. Lecture rooms were packed wherever he spoke; in Pisa, Florence, vents. In 1510,
Pacioli was named director of the Franciscan monastery in San sepulcro and that's where he
returned to spend the last years of his life among fellow friars who weren't so pleased with her
famous associate. In 1514, the 69 year old Pacioli was called away from San sepulchral by Pope
Leo the tenth to teach mathematics at the University of Rome. The Pope intended to create a
faculty that was second to none that's why he called Pacioli. But whether Pacioli was ever to
fulfill his assignment is unknown because there is no record of Pacioli ever having made it to the
university or to Rome. Pacioli may have spent his final days in San sepulchral where he died in
1517. Not much is known about Pacioli's death. Some say he's buried here beneath the old
church of San Giovanni. What is known is his life and the contributions he's made to the quality
of ours. The Venetian method of accounting today called double-entry is one of the most
enduring intellectual creations in post Renaissance history. An ingenious system that gives the
world a way to record and summarize commercial activity. The double-entry system of accounts
described in Pacioli summa 500 years ago is still being used across the globe today. The Summa
speaks to every businessman, every accountant, every scholar, student and merchant. It
transcends cultures and countries, languages, ideologies, generations. The 15th century precepts
put forth in Pacioli's writings can be found virtually unchanged in today's corporate annual
reports, business books, spreadsheets, financial statements, cashflow projections, cost analysis.
Modern economic history began with the Renaissance and Luca Pacioli who was the first to
publish the method for recording, summarizing and conveying that economic history. He was the
first to take accounting into account. Economic growth and financial stability depend on
understandable reliable accounting practices. It is believed that without widespread adoption of
the accounting principles set forth in the Summa, many of the joint trade ventures to the New
World and Far East would have run aground in the case of finding a more direct water route to
India. It is generally believed an accountant convinced Queen Isabella to invest in an exploratory
venture that ultimately reached the shores of North America. Aboard one of those ships was a
gentleman named Columbus and the accountant, the Queen insisted accompany the voyage to
ensure a proper accounting of her investment. Who was Luca Pacioli? He was a great man
walked and worked with other great men. Renaissance man. Like Leonardo da Vinci, Leon
Battista Alberti, Federico, Duke of Urbino, Piero della Francesca. Luca Pacioli exchanged and
published information that generated new thought and broadened the world's perspective. Yet
Pacioli's greatest masterpiece was not made of stone, paint or marble, it was an idea, a vision, an
equation, that found its way to ink and parchment and the world. He was a poor child, who lived
a life rich with invention and growth. He was a mathematician and a monk, an accountant and an
artist who crossed disciplines and mountains in pursuit of knowledge. He wrote worshiped,
wandered and wondered about the world around him and he gave that world a financial model,
the tools to build a solid economic foundation, a future. Who was Luca Pacioli? He was the
unsung hero of the Renaissance. And 500 years after he died, he still teaches us. He still touches
our lives. May my teachings be accessible to everyone so our world through the instrument of
language will be enriched for the praise and glory of God.