Double-Entry Bookkeeping

Double-entry bookkeeping is believed to have originated among medieval Italian merchants and spread rapidly with trade across Europe. The earliest explanation of the system is included at the end of a treatise by a notable Italian mathematician, Luca Pacioli published in 1494. Religious attitudes of the time, which banned usury (profiting from money lending) an frowned on profit-seeking trade, may have influenced its appeal to the notion of balance - a much more acceptable concept at the time. However it originated, its rapid adoption throughout Europe and elsewhere as the model for correct and reliable bookkeeping is a testament to its great utility and versatility. To this day the double-entry system provides the logical structure for almost all bookkeeping systems

, and its historic dominance has played a significant role in determining the form, content, language and limitations of accounting statements. The balance and logical integrity of the double-entry system can be expressed in the form of an accounting equation.

Debits and Credits:

The mathematical logic of the accounting equation underlying the double entry system could clearly not be simpler. However, the practicalities of accurate record keeping using this system before the days of computers and calculators necessitated a cunning form of two-sided arithmetic, the vestiges of which have not yet been lost.