Paciolo on Accounting

R. Gene Brown, Kenneth S. Johnston

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9780429603044
• Edition: 1
• Topic: Business
• Subtopic: Accounting
• Index: Business

Published in 1963, this book about the famous accountant and bookkeeper Luca Paciolo explores his extraordinary contribution to the development of the accounting profession. Paciolo is the first known writer to publish a work describing the double entry process.

SECTION II

The Translation of the Bookkeeping Treatise

SECTION II

CONTENTS

Paciolo’s Treatise on Bookkeeping

PARTICULARS DE COMPUTIS ET SCRIPTURIS

CHAPTER	TITLE
1	Those Things Necessary to the Successful Businessman. Methods of Properly Keeping a Ledger and Journal in Venice and Elsewhere.
2	The First Part of this Treatise: The Inventory—What It Is and How It Should be Taken by Businessmen.
3	An Example of an Inventory with All Its Formalities.
4	Warnings and Helpful Advice to the Successful Businessman.
5	The Second Part of this Treatise: Disposition—What Is to be Understood by It, What It Consists of in Business, and the Three Principal Books of Businessmen.
6	The First Book, Called the Memorandum, Scrap Book, or Household Expense Book. What Is to be Understood by It, How Entries Should be Made in It, and by Whom.
7	The Manner in Which All Business Books Are to be Authenticated, Why, and by Whom.
8	How Entries Are to be Made in the Memorandum, With Examples.
9	The Nine Ways in Which It Is Customary for Businessmen to Buy. The Goods Which It Is More or Less Necessary to Buy on Time.
10	The Second Important Business Book Called the Journal. What It Is and How It Must be Kept in an Orderly Way.
11	The Two Expressions Used in the Journal, Especially in Venice: One called Per, and the Other A, and What Is to be Understood by Them.
12	How to Enter and Arrange Items in the Journal by Means of Debit and Credit Entries, With Many Examples. The Two Other Expressions Used in the Ledger, the One Called Cash and the Other Capital, and What Is to be Understood by Them.
13	The Third and Last Principal Business Book Called the Ledger. How It Is to be Kept Double With Its Index, or Single Without.
14	Posting Entries from the Journal into the Ledger, and Why for Each Entry in the Journal There Are Two Made in the Ledger. How Entries in the Journal Should be Cancelled. The Two Ledger Page Numbers Which Are Placed in the Margin of Each Entry.
15	The Way in Which Cash and Capital Entries Should be Posted in the Ledger. The Date Which Is Written at the Top of the Page According to Ancient Custom. Changing the Date. How to Arrange the Space on the Pages for Small and Large Accounts in Accordance With the Requirements of the Business.
16	How Entries Relating to Merchandise Should be Posted to the Debit and Credit in the Ledger.
17	The Keeping of Accounts With Public Offices, and the Municipal Loan Bank in Venice, Which Is Governed by Districts.
18	How to Keep Your Accounts With the Office of Exchange in Venice. How to Make Entries Relating Thereto in the Memorandum, Journal, and Ledger. Information About Loans.
19	How to Make the Entries in Your Principal Books for the Payments Which Have to be Made by Draft or Through the Bank.
20	The Well Known and Peculiar Entries in Business for Trading and Partnership and How They Should be Entered in the Business Books. Simple Tradings and Dates, Then Complex Tradings, Examples of Each in the Memorandum, Journal, and Ledger.
21	The Well Known Account Called Partnership.
22	The Entries for Each Kind of Expense; for Example, Ordinary and Extraordinary Household Expenses, Business Expenses, and Wages of Clerks and Apprentices.
23	The Order and Manner in Which the Accounts of a Store Should be Kept. How the Entries Should be Made Separately in the Authentic Books of the Owner and Those in the Store.
24	Posting the Entries With the Bank in the Journal and Ledger. Bills of Exchange—Whether You Deal With a Bank or As Banker With Other Persons. Receipts for Drafts—What Is Understood by Them, and Why They Are Made Out in Duplicate.
25	The Income and Expense Account, Which Is Usually Kept in the Ledger.
26	How Entries Relating to Trips Should be Made in the Business Books. Why, of Necessity, There Are Two Ledgers for This.
27	The Well Known Account Called Profit and Loss, or Profit and Deficit. How This Account Should be Kept in the Ledger, and the Reason Why It Is Not Placed in the Journal as the Other Accounts.
28	How Ledger Accounts Should be Carried Forward When They Are Full. The Place to Which the Remainder Should be Transferred, in Order to Avoid Fraud in the Ledger.
29	How to Change the Year in the Ledger Between Entries When the Books Are Not Closed Every Year.
30	How to Abstract an Account for a Debtor or an Employer If You Are the Manager or Agent for the Administration of His Property.
31	How to Correct One or More Entries Entered in a Place Different From That in Which They Should Have Been. This Usually Happens Through Absentmindedness.
32	How the Ledger Should be Balanced and How the Accounts of the Old Ledger Should be Transferred to the New Ledger: The Manner of Verifying It With Its Journal, Memorandum, and Other Documents.
33	How to Record the Transactions That Might Occur While Balancing the Books. Why No Entry Should be Changed or Made During That Time in the Old Books.
34	The Way to Close All the Accounts of the Old Ledger. The Preparation of the Trial Balance, Which Totals All of the Debits and Credits.
35	How and in What Order Manuscripts, Confidential Letters, Policies, Processes, Judgments, and Other Important Instruments Should be Kept. The Registry of Important Letters.
36	The Summary of Rules and Ways of Keeping a Ledger.
37	Items Which Should be Entered in the Ledger.
—	Items Which Require Recording by Businessmen.
—	An Illustration of Ledger Postings.

Chapter 1

Those Things Necessary to the Successful Businessman. Methods of Properly Keeping a Ledger and Journal in Venice and Elsewhere.

In addition to the subjects already dealt with in this book, I have prepared this greatly needed special treatise so that the respectful subjects of the Duke of Urbino may have all the rules that successful businessmen require.¹ The present treatise is included for this reason only: It will serve all the needs of the subjects regarding accounts and recording. Therefore, I intend to give sufficient rules to enable businessmen to keep all their accounts and books in an orderly fashion.

There are three things necessary to one who wishes to operate a business successfully. The most important is cash, or some equivalent economic power. Without this, operating a business would be extremely difficult. As the saying goes, “One thing is necessary: substance.” Many people throughout Italy have carried on a substantial business with little more than good faith and, because of their ability to obtain credit, have attained wealth. In the great republics, oaths were taken “on the word of a good businessman,” indicating the great confidence in their integrity. This is not unusual because truly everyone is saved by faith, without which it is impossible to please God.

The second thing necessary in business is to be a good accountant and a ready mathematician. The regular rules and canons necessary to each transaction are given so that any careful reader can understand it and become proficient. The reader should understand mathematics (as given in previous sections of the book), for that which follows depends on such an understanding.

The third and last thing necessary is that all the businessman’s affairs be arranged in a systematic way so that he may get their particulars at a glance. The debit and credit method should be used, since business is best described in this way. This is essential to businessmen, for without systematic recording, their minds would always be so tired and troubled that it would be impossible for them to conduct business. Therefore, I have arranged this treatise in step-by-step fashion, presenting the method for recording all sorts of entries. Although I cannot write all that ought to be written on the subject, a careful reader will be able to apply the methods illustrated to his special situation.

The system employed in Venice will be adopted here, for it is certainly recommended above all others. In grasping it, the businessman will be able to understand any other system. This work is divided into two principal parts: The Inventory and the Disposition. I shall discuss the former first and then the latter, following the order set forth in the table of contents.

Let him who wants to know how to keep an orderly Ledger and its Journal pay strict attention. So that the reader may fully understand the procedure, the case of one who is just starting in business will be used. How to keep accounts and books will be illustrated in order that each thing can easily be found in its proper place. If each thing is not in its right place, great trouble and confusion would arise. As the saying goes, “Where there is no order, there is chaos.”

As mentioned above, a perfect model will be given to every businessman and will be divided into two principal parts. These will be made quite clear separately so that fruitful results may be obtained from them.

Note

¹ It should be remembered that Paciolo dedicated the entire SUMMA to Guidobaldo, Duke of Urbino. In several places in the SUMMA, Paciolo again mentions the Duke. This treatise on bookkeeping is no exception.

Chapter 2

The First Part of This Treatise: The Inventory—What It Is and How It Should Be Taken by Businessmen.

First, I assume that each businessman is working toward an end, and that he makes use of every effort to satisfy this end. The end or objective of every businessman is to make a lawful and satisfactory profit, so that he may remain in business. Therefore, businessmen should commence their affairs with the name of God at the beginning of every book, always bearing His holy name in mind.

The businessman must then prepare his Inventory in the following way: First of all, he must write on a sheet of paper or in a separate book all his worldly belongings, that is, his personal property or real estate. He should always begin with the things that are more valuable and easier to lose. These consist of such things as ready cash, jewels, and silver. Real estate, such as houses, land, lakes, meadows, and ponds cannot be as easily mislaid as personal property. He must then record all other things in proper order in the Inventory. However, the day, the year, the place and his name must always be recorded first. The entire inventory must be completed on the same day, otherwise there will be future difficulty in managing the business.

I will now give you an example of how the inventory should be taken.

Chapter 3

An Exampl...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Copyright Page
• Dedication
• Table of Contents
• INTRODUCTION
• PREFACE
• THE PAINTING OF PACIOLO
• SECTION I. Paciolo: The Man, His Work
• II. The Translation of the Bookkeeping Treatise
• III. The Original Treatise Reproduced
• BIBLIOGRAPHY