Double Entry
Categories: Accounting
Yeah, we want to go there, but...we won't.
In 1494, Luca Pacioli—Italian, if you couldn’t guess—described the accounting system utilized by Venetian merchants. Or, by “merchants of Venice,” for all you Shakespeare nuts. He described the introduction of a double-entry bookkeeping system that the merchants used to track all their income and, uh…outcome.
Double entry. A set of two columns, where debits happen on one side...like a withdrawal of ten grand in cash...to then buy 10 grand in inventory, which happens as a credit on the other side. A credit of 10k to inventory.
Since people had been in business for a long time prior, there was clearly some system of accounting already in place, but Pacioli was the first to leave us evidence of ledgers that carefully tracked the merchants’ debits and credits.