Who is the Father of Accounting? (Luca Pacioli)

ZACH DE GREGORIO, CPA www.WolvesAndFinance.com If you are an accountant, there is a person in accounting history that you need to know about. That person is Luca Pacioli, and he has become known as the “Father of Accounting” because he has probably influenced your work more than anybody else. The timing of this is really important. Luca Pacioli came from a poor family and lived in Italy during the Renaissance. If you remember what happened during the Renaissance, Italy had all these coastal cities that were important trade routes across the Mediterranean. These cities became very wealthy, and you had a whole new type of business environment with wealthy merchant families. This is a big contrast from the Dark Ages, where the wealth was controlled by monarchies. These Italian cities became a source of growing economic activity that funded all the great advances we saw in the Renaissance like science and art. All this economic activity required a lot of accounting. Luca Pacioli was an accountant for a number of these wealthy families as well as a teacher of accounting. The reason Luca Pacioli is known as the Father of Accounting is because he wrote the first accounting textbook. What is incredible, is that the way he describes accounting is the same way we do accounting today. He lays out the whole system of double entry bookkeeping. He describes debits and credits. He describes journals and ledgers. He describes the financial statements. He describes the year end closing process. And a number of other things. He did not invent these things, but what he did was gather together all the best practices of accounting, and put them in a book. It effectively standardized the profession of accounting and spread this knowledge throughout the business community. I just took a week of vacation. Since I am a crazy accountant, I spent my week studying the manuscripts of Luca Pacioli from the Renaissance. What I discovered is his writing is so much more than accounting. I wanted to share with you six insights I had from Luca Pacioli’s work. Double entry bookkeeping was an incredible innovation, that was so effective, we still use it today. Accounting did not come about by some person sitting in a back room somewhere doing journal entries. The Father of Accounting spent his life traveling across Italy, hanging out with the great artists, being engaged in the business revolution, becoming a best-selling author and a celebrity, and going from poverty to success. When you understand the history of accounting, you start to realize that accounting has a really exciting past, and is going to have an exciting future as well. Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.