1

USING ACCOUNTING HISTORY AND LUCA PACIOLI TO PUT RELEVANCE

BACK INTO THE TEACHING OF DOUBLE ENTRY

Alan Sangster
BA, MSc, Cert. TESOL, PhD, CA
Professor of Accounting Education
Middlesex University Business School, London NW4 4BT UK
00 44 78 1744 3420
E-mail: a.j.a.sangster@btinternet.com

Abstract
Double entry bookkeeping is generally considered to be a topic which students struggle to
learn. In part, this is seen as being due to their lacking awareness of both business processes
and of the business environment in which accounting operates, which makes double entry
appear an abstract concept and one they find hard to justify the effort of learning. It is also
seen by many faculty as failing to encourage critical thinking; and as a purely mechanical
process which is unnecessary in a university degree in accounting that it belongs in the
professional office where it can be taught in context in the work environment. This paper
argues that there is an alternative justifiable view that, far from being unnecessary and failing
to encourage critical thinking, knowledge and understanding of double entry is a key element
required of anyone who seeks to fully engage in critical thinking concerning the validity of
accounting information. It argues that double entry should be retained in the undergraduate
accounting curriculum that its absence from the curriculum encourages blind acceptance of
accounting information as truth and makes it more difficult to encourage accounting
students to think critically about accounting information at later stages of their studies. It
suggests that by adopting an accounting-history-based approach, students can be presented
with a context that may overcome their traditional failure to grasp the topic well at an early
stage in their accounting studies. To support this claim, the paper suggests themes that could
be covered when introducing the topic, suggests sources of teaching material, and provides
examples of historical material from the father of accounting, Luca Pacioli, in order to assist
faculty who wish to try it for themselves in the classroom.

Keywords: Teaching. Accounting history. Pacioli. Double entry bookkeeping


1. Introduction

Historical source materials have long been recognized and appreciated as a
learning tool in the social sciences. They help to explain the development of
concepts, the reasons for their development, and alternative solutions to a
variety of problems. They fulfill, to a certain extent, the function which the
laboratory serves in the natural sciences. The student of economics, for
example, is exposed to readings in economic history and the development of
economic thought. (Homburger 1973, p. 785)

For many years, accounting historians have argued that embedding accounting history
in the curriculum can help students understand better the environment in which accounting
functions and of the way changes in that environment influence accounting practice (e.g.
Haskins 1904; Previts et al. 2006). In the context of double entry bookkeeping, an awareness
of the history of accounting practice can increase awareness of the relevance of accounting
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processes and practices, and so lead to greater effort on the part of students to learn and
understand the double entry process.

1.1 Accounting History
Previts, Flesher, and Samson (2006) suggest that, History prepares students to accept
changes as a condition of the human experience students are better prepared to anticipate
and expect change History assists in expanding the boundary of a course historical
considerations can make accounting more interdisciplinary. It is through accounting history
that economics, political science, technological innovations, cultural and social change, and
events can be related to accounting. This changes the focus of the class from number
crunching and rule memorization to be as thought provoking and intellectually challenging
as any course. (pp. 18-19, emphasis added)
Richardson (2008) goes further in a paper that encourages accounting historians to
establish their interest as a discipline in its own right. The paper proposes three strategies that
are important if this is to occur. The first of these strategies is, making accounting history
relevant to education, standard-setting, and organizational memory/identity.
Such calls are not a recent phenomenon. Included in a book of the collected work of
C. W. Haskins (co-founder of Haskins & Sells), is the text of a speech he delivered in 1900 at
the opening of the New York University School of Commerce, Accounts, and Finance, of
which he was Dean. In it he said:

Accountancy, as a progressive science, must be the same yesterday, to-day,
and tomorrow, except that as a development it is older and wiser as time goes
on. Its past, present, and future will always have the family likeness, and will
pass before us hand-in-hand. To know our past, then, is the better to
understand our present and to forecast or control our future. (Haskins 1904,
p. 141)

In that book, there is an introduction by the collator of Haskins work, F. A. Cleveland
(of the Wharton School of Finance and Commerce). Written in October 1903, he reports that
during that year five university presidents had tried to establish business education into their
universities, but that there were insufficient candidates to make this feasible. The subjects
they sought to include were split into three groups, accounting, finance, and business
administration. The topics to be covered in the accounting curriculum were (p. viii-ix):
Principles of accounting
Bookkeeping
The installation of accounts
Auditing; and,
The history of accountancy

Thus at the time when accounting as a university subject was in its infancy,
accounting history was seen as an important element of the accounting curriculum. In
addition, as Haskins explained in his speech, at that time very little had been published about
the history of the subject
1
. Apart from two chapters in Haskins book, which really only
scratch the surface of accounting history, the first comprehensive book on accounting history
was probably R. Browns 1905, A History of Accounting and Accountants, which included J.

1
The 1903 Catalogue of the ICAEW lists only eight entries under Accountancy History, three by C. W. Haskins.
Only one of the eight is a truly historic piece, being an article on 13
th
century accounts. There is one book, but it
is a historical sketch about professional accountants, rather than a book about the history of accounting.
3

R. Fogos seminal chapters on History of Accounting. Browns book was published to
celebrate the 50
th
anniversary of the establishment of the chartered accountant qualification in
Scotland. In addition to the normal print run, 250 copies were printed in a separate limited
edition, yet its availability did not propel accounting history into the accounting curriculum.
Perhaps that is surprising when university presidents were promoting its inclusion in the
curriculum, perhaps not it takes a brave person to use only one source to teach any subject,
never mind history with its contradictions and speculations interspersed with factual material,
often in so seamless a way that it is impossible to distinguish fact from speculation.
Accounting as a university discipline was well established in Italy by the beginning of
the 20
th
century and history was and remains a core element of its instruction in that country.
However, it was a further 50 years before the same could be said of its emergence in the
principle English speaking countries of the world. Nor was the inclusion of accounting history
in the accounting curriculum assisted by the attitude of the largest association of accounting
academics, the American Accounting Association (AAA). The AAA resisted the idea of sub-
groups (including taxation, managerial accounting and accounting history) for many years (on
the grounds that doing so would result in a splintering of the organisation). From 1968
onwards, the AAA ignored calls from several of its own committees for greater involvement
in accounting history. The committees had argued that there was a need to teach accounting
history so as to inform students of the way in which the subject developed. When the AAA
eventually relented and acknowledged the advantages to its membership of specialised sub-
groups, accounting history was not among those it was willing to recognise (Flesher and
Flesher, 2005). In 2008, a closer tie was introduced between the AAA and accounting
historians with the AAAs agreeing to allow streams of papers on accounting history to be
included in the programme for its annual conference in Anaheim, CA. However, there is no
indication that this is likely to lead to any greater recognition of the relevance of accounting
history to the accounting curriculum.
As a direct result of the AAA executives apparent lack of interest in accounting
history, the Society of Accounting Historians was formed in 1973 and it is from that initiative
that research into accounting history in the English speaking world has become focused and
organised in a way that simply did not exist before, with regular conferences and a refereed
journal, The Accounting Historians Journal. Two more journals followed: the UK-based
Accounting, Business, Financial History Journal in the 1990s and the Australian-based
Accounting History in this present decade, and the editorship of both these journals have been
organising annual or biannual conferences for many years. It is as obvious now as it was in
1900 and 1968 that there was much to discover about the history of accounting and much to
learn from it.
In 1990, Previts et al. published a paper in Abacus that had looked at the history of
accounting and at its relevance today. Others had preceded them with calls for the inclusion of
accounting history in the curriculum, for example, Piacker (1972), the AAAs Bedford
Committee (1986), the Accounting Education Change Commission (1990), and others had
subsequently repeated the recommendation, for example, Coffman et al.s (1993) call for
more history in the curriculum, and Slocum and Sirams review of the teaching of accounting
history in the US in the 1980s and 90s (2001) which found that its was being included less in
the curriculum than before.
More recently, the call for accounting history to be included in the curriculum has
been repeated by Previts et al. (2006) [in a chapter in a monograph published by the teaching
and curriculum section of the AAA (Smith 2006)] and by Richardson (2008). Yet, a search
through the curricula of accounting degrees would reveal very little evidence that accounting
history is being taught to todays students in the English-speaking world. To the casual
observer, accounting would appear to be being taught in a vacuum, with little reference to
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either its past or to its future. It appears to lag behind the real world and to focus upon
teaching students about accounting as it was practised in the pre-computer age of the 1970s,
with the sole acknowledgement of progress being an emphasis on accounting standards in all
accounting degrees, presumably on the basis that knowledge of the latest pronouncements of
the IASB and FASB are all the up-to-date information that is needed for a graduate to enter
the profession. In addition, anecdotal evidence suggests that double entry bookkeeping the
first real development of accounting into the discipline as we know it today is no longer
considered to be a necessary tool of an accounting graduate.

Double entry bookkeeping
Yet, anyone with links to accounting firms and employers of accounting graduates will
almost certainly have heard them bemoaning the fact that accounting graduates cannot do
double entry. For example, the chair of BAEC (the CCAB-funded board that accredited
accounting programmes on behalf of the UK and Irish CCAB organisations during the 1980s
and 90s), made a very strong statement to that effect in an address to a meeting organised by
the ICAEW for academics in 1992, stating that the accountancy firms did not care how much
students knew about the rest of accounting, all they really looked for in their accounting
graduates (compared to non-accounting graduates) was that they could do double entry, yet
they generally could not. In May 2008, the position had not changed (CHA 2008). Double
entry is seen by the UK accounting profession as an essential skill for accounting graduates to
possess. Yet, in the UK at least, it appears to being taught increasingly less.
Double entry, like accounting history, appears to be considered to be largely irrelevant
for an accounting student, perhaps placing it on an equal footing with knowledge of how to
use a calculator. When students are required to apply their knowledge and understanding to
prepare accruals and adjustments to a trial balance and then create a set of financial
statements, more often than not, it is their inability to grasp the nuances of double entry that
lets them down. They can place individual account balances in the financial statements with
relative ease, for they simply have to memorise the layout of the relevant statement in order to
do so. But, arriving at the correct amount to treat as the figure for an entry in a financial
statement is not always so trivial, particularly when students either lack, or possess a flawed
understanding of the principles of double entry.
What colleagues forget is that, like mathematical calculations, double entries can
sometimes be complex, requiring sound knowledge of the principles of double entry in order
to make the appropriate entries. If the ability to prepare proofs is considered a necessity of the
armoury of the typical mathematics scholar, why is it that many accounting academics believe
that an accounting student without the knowledge to explain the entries in the ledgers will be
as good an accountant as one who can? It is difficult to imagine how a student who knows
little about double entry could explain the processes involved in window-dressing or teaming
and lading; nor would such students be expected to be able to provide examples that
demonstrate how an error in transaction processing can lead to major errors in ledger
accounts; or how fraud can be perpetrated through the use of journal entries. They would have
little sense of the types of recording errors that may arise or of how to detect them, and no
sense at all of how to correct them. By default, such students are initially led to believe that
accounting information is true. They are not taught to be sceptical of the accuracy of
accounting information at its most fundamental level. Yet, any auditor would tell you that
many errors and manipulations of accounting information arise through the process of double
entry.
We think of double entry as being a device used to ensure transactions are recorded
correctly so that it can be used to produce relevant and reliable financial information. From
the time of its invention, its biggest boon was that it enabled businessmen to quickly establish
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their financial position, both in terms of their net worth and in terms of profitability (Pacioli
1494). But, it was and is always open to misuse, such as when Xerox over a five year period
treated future income from equipment rentals as current income and so overstated earnings by
$1.5 billion; or when WorldCom improperly capitalized $3.8 billion of operating expenses
(Patsuris 2002); or when, as the Hyderabad (India) Public Prosecutor alleged, B. R. Raju
invented 13,000 fictitious employees (there were 40,000 real employees) at Indian IT
conglomerate Satyam and took and estimated $1.5 billion from the company at a rate of $4
million a month for his own use (Leahy and Sood 2009). Double entry cannot prevent such
actions, but double entry must be applied in order to enact them. Understanding double entry
means students can understand how these deeds were enacted and better explain their
implications.
Does this really matter? Would it make a difference if students understand those
underlying accounting processes? If we wish them to be critical thinkers and reflective
learners, yes. By understanding the principles of double entry and the ease with which it can
be used to put data in whatever account the accounts clerk, bookkeeper, or accountant wants
we learn to be sceptical of accounting information, to be distrustful of its apparent perfection,
and to question the reliability of the manner in which the figures we are looking at were
produced. Knowledge of double entry enables students to begin developing critical thinking
skills from the start of their degree.
That is the point where our students should begin to think critically about accounting.
Without this knowledge, they cannot fully answer questions such as: how did this information
get here? is this information correct? how did that happen? what process was followed to
arrive at the present information? who must have been involved? how far down the
organisation must this have taken place? would the individuals responsible have been able to
do this themselves? could it have been accidental?
Only incomplete answers can be obtained for these questions if double entry is a
mysterious black box. As Carr-Chellman and Dyer (2000) put it: The world around us is
full of meanings, wrapped around one another like the layers of an onion. The surface layers
are easily examined, but include only a part of the whole. In order to understand the world
around us, the surface layers must be peeled back. We need to look past the easy answers to
reveal the deeper meanings. (p. 99)
Accounting students who do not learn double entry lack the tools to fully understand
accounting information. If we want our accounting students to think critically, this is where
we must start, or they may as well be students of any other discipline that includes an
accounting module in its curriculum: they may become critical thinkers and reflective learners
but, so far as accounting information is concerned, they will not be as effective as they might
have been in either sphere. However, as indicated at the start of this paper, students do not
easily relate to double entry: is there something we can do that will help them become more
willing to learn so that we may help them become critical thinkers about accounting
information?
Up until 2000, the importance of double entry was recognised by the UK Board of
Accreditation of Accounting Educational Courses which required the inclusion of double
entry in UK undergraduate accounting degrees. When the Board was dissolved in 2000,
departments found they had more freedom to choose the content of their modules. When they
looked for something to drop in favour of more relevant material, double entry appears to
have been a soft target.
Anecdotal evidence suggests that some, if not the majority of double entry teaching in
the UK is now done using a version of the BPP (EQL) Interactive Bookkeeping Tutor, a
package that can be a very effective instructional device if its use is integrated into the course
(Rawlinson and Sangster 1992), yet the experience of the author as employee or external
6

examiner at 20 per cent of the universities in the UK and Ireland with accounting courses in
their curricula suggests that its use is more akin to a reference text in the library than as an
integral element of tuition.
There therefore appear to be two related issues that are being ignored in todays
accounting degrees, particularly in the UK, both of which ought to be of benefit to students:
the history of accounting (so that students may learn from accountings past) and double entry
bookkeeping (so that they may understand the process that led to the entries they find in the
ledgers and financial statements). The rest of this paper considers whether it may be possible
to combine these two topics into one module in the curriculum. It does so by looking at how
double entry bookkeeping was first taught; at why it was considered important then; at
whether the motivations for teaching it then are still relevant today; and at whether the first
known textbook on double entry bookkeeping (Paciolis treatise, 1494) could be used in the
classroom today. In doing so, it presents faculty with an approach to teaching double entry
that the author would argue is entirely compatible with a focus on critical thinking and the
development of reflective learning.

2. Setting double entry bookkeeping in a historical context
In 2006, the Teaching and Curriculum Section of the American Accounting
Association published a monograph, Reflections on Accounting Education Research (Smith
2006). It included a chapter by Previts, Flesher, and Samson which explains how research into
accounting history can be used in the classroom to inform students about the changing
environment and behavior that influences accounting action (p. 17). This claim for the
pedagogic usefulness of accounting history has echoes from the past. For example, in 1972,
Philip Piaker wrote a short paper for the Accounting Review in which he stated that, even at
the introductory accounting level, it can be very worthwhile and intellectually stimulating to
devote some time to a consideration of the historical roots of accounting. He then offered a
means of doing so: [students] play the role of historical detective and hypothesize the
characteristics of medieval society from an examination of the Datini financial statements
(from 1399) [:]consideration of financial statements as artifacts at the very onset of the
study of accounting helps to expand the student's understanding of what accounting
communicates.
Responding to Piaker, Homburger (1973), also writing in the Accounting Review,
made the statement presented at the Introduction to this paper, that historical material is a
long-recognised learning tool in the social sciences, so implying that it ought to be no less
relevant in accounting education.
However, despite these two articles appearing in rapid succession, little integration of
accounting history into accounting programmes seems to have occurred by the time Previts,
Parker, and Coffman (1990) referring to a paucity of accounting history in accounting
programs compared to a relatively high amount of business history being taught in other
business school programmes, expressed concerns that opportunities were being lost on three
counts:

First, a profession based on traditions built over many centuries should
educate its members to appreciate their intellectual heritage. Second, the
import of advances in thought, of major contributors to the literature, and of
crucial positive studies may be lost, fragmented, or inadequately recognized in
the longer term unless they are documented and incorporated by scholars who
have historical skills. Third, without access to analyses and interpretations of
historical developments in accounting thought and practice, today's empiricists
7

risk basing their investigations upon incomplete or unjustified claims about the
past. (pp. 3-4)

While these concerns do not directly relate to the focus of this paper, the third can be
considered as a warning that we need to understand why things are done a certain way in
order to fully appreciate the risks the established practices were developed to address.
If it is accepted that a historical focus may be beneficial, can there be a better time to
adopt this vehicle than when a topic has proven too abstract for generations of accounting
students? And what can be more appropriate for delivery through accounting history than the
subject of the first ever printed treatise on accounting, double entry bookkeeping?

3. A Historical Approach To The Teaching Of Double Entry
There are many different ways in which accounting history may be integrated into the
teaching of double entry, ranging from recounting the development of accounting up to the
present day based on texts such as Fogos seminal 77-page history of accounting from 1905
to, if a shorter time-span is sought, Geijsbeeks (1915) history of bookkeeping from Paciolis
1494 treatise to the early 20
th
century, or Peragallos more detailed account from 1938.
However, if what is wanted is that students actually learn double entry then surely the central
focus should be upon Paciolis 24,000 word treatise which, for the first time, set down how to
operate an effective and efficient bookkeeping system.
There are five English translations of the treatise (Geijsbeek 1915; Crivelli 1924;
Brown and Johnston 1964; Gebsattel 1994; and Cripps 1995) along with many others in at
least 14 other languages. Of the English translations, Cripps presents the easiest option as he
presents Paciolis approach in a modern-day style, complete with diagrams where Pacioli had
virtually none, but any of the translations could be used. However, both the Geijsbeek and
Crivelli translations are no longer subject to copyright making it relatively easy to provide
students with copies. Geijsbeeks offers the added benefit of facsimile reproduction of
Paciolis text on opposite pages to the translation and also contains Geijsbeeks summary of
the history of bookkeeping. It is difficult to envisage a more appropriate text in the context of
this paper, and it is available free in a variety of formats at
http://www.archive.org/details/ancientdoubleent00geijuoft
According to Pacioli, he wrote his treatise at the behest of his patron, the Duke of
Urbino as it was much needed by businessmen to keep all their accounts and books in
good order. (Cripps 1995, xv). It was written at the time of the merchant princes, the stay-at-
home merchants who used agents and employees to buy and sell on their behalf beyond the
place where they were themselves located. These merchants and others working on their own
or in partnerships needed to be able to control the financial position of their businesses. This
had resulted in the development of a reliable system of recording business transactions which
had been refined over the previous 200 years: double entry bookkeeping.
However, in 1494 bookkeeping was performed in a variety of similar but different
ways. It had not yet become a unified method. Pacioli took the latest version of the method
the Venetian approach as the basis of his treatise and it is through its adoption, firstly in
Northern Italy and then throughout Europe, that double entry and accounting as we know it
today came to exist. Adopting a uniform method of double entry bookkeeping enabled
merchants to control the financial affairs of their businesses and of their employees and
agents. Paciolis treatise gave instructions in how to record barter transactions and
transactions in a variety of currencies both being far more commonplace than they are
today.
His treatise also enabled merchants to audit their own books and to ensure that the
entries in the accounting records made by their bookkeepers complied with the method he
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described. Without such a system, all merchants who did not maintain their own records were
at greater risk of theft by their employees and agents: it is not by accident that the first and last
items described in his treatise concern maintenance of an accurate inventory. [See, for
example, the works of Raymond de Roover including de Roover (1942, 1956, and 1963),
Sangster et al. (2008)]
Paciolis treatise contains very few examples. However, in Chapter 12, he shows how
to prepare seven journal entries at the start of a year:


Exhibit 1: Paciolis journal entries

Although Pacioli showed at the end of each journal entry on which page in the ledger
to place the amounts (signified by the symbols for Lire, Soldi, Grossi, and Picioli) he omitted
actual amounts from these example entries. The layout in the treatise shows the monetary
amount positioned in the same paragraph (i.e. column) as the rest of the text of the journal
entry. However, the text below the entries makes it clear that the amounts should be in a
separate column as shown below for Journal Entry 1 from Chapter 12:


Debit 1
Credit 2
Venice, November 8, 1493 1
st

Debit cash // Credit capital for different coins which appear in the
inventory in total Venetian gold ducats valued at 24 grossi per ducat
and 32 picioli per grosso in gold lire is worth:
S G P


Cripps, in his 1995 translation, updates this layout to the present day. However,
despite inserting a column for (folio) references he omits Pacolis reference to the page
number of the accounts to be debited and credited; descriptors (i.e. monetary symbols) for the
amounts entered in the debit and credit columns
2
; and omits the place where the journal is

2
As will be discussed later in this paper, there was no need for Pacioli to include separate columns in
his journal entries for the debit and credit entries. All his entries are simple entries involving one debit and one
credit, and so the amount to be entered in each column is the same.

9

maintained (Venice) something that was very important in 1494 with many merchants (and
banks) having agents (and branches) in various places. He also inserts a (wrong) number for
the page in the journal in which the entry appears rather than using Paciolis number for the
journal entry.
In addition, he uses the number of grossi in a Venetian gold ducat to represent the
amounts for the debit and credit entries, rather than the actual amounts. The reason for
including an actual amount in these columns is obviously to increase the realism of the
example, but it would have been helpful had Cripps at least entered the ledger account
numbers in the reference column. In the reproduction of the journal entry from Cripps (p. 21),
the reference numbers have been added and the page number replaced to show the correct
number for the journal entry:

Journal Entry 1
Year: 1493 AD
Date Description Reference Debit Credit
08 Nov To: Cash
By: Capital
1
2
24
24
Being gold, silver and copper coins recorded on the
inventory; also gold ducats, gold Venetian coins, at the
exchange rate


The entries in the two ledger accounts from this journal entry are given in Chapter 15:


Exhibit 2: Paciolis debit entry in the ledger from Journal Entry 1

This is entered on the debit side of the ledger account for cash and should be entered
as follows:



8 Nov
Jesus 1493
Cash debit
To capital for the money in various forms that I possess:


2





S


G
1

P

The credit entry is:


Exhibit 3: Paciolis credit entry in the ledger from Journal Entry 1

This is entered on the credit side of the ledger account for capital and should be
entered as follows:



8 Nov
Jesus 1493
Capital credit
To cash for the money in various forms that I possess:


1





S


G
2

P

After each entry is made in the ledger, Pacioli instructs the reader to score through the
journal entry, so there will be two lines scoring out each entry in the journal, or placed beside
it. He says you should be brief in the ledger entries as the details are already entered in the
10

Journal. However, at that time (possibly as books could be lost, which is something he
mentions at this point) there clearly was a need to put some detail in the ledger entries other
than simply the date, the other account(s) and the amount involved and so he stopped short of
omitting a description in the ledger accounts.
The typesetter appears to have misunderstood the placement of the ordinals, 2
nd

through 7
th
in Paciolis journal entries, placing them in the preceding journal entry instead of
immediately after it in the same position as 1
st
is shown above in Journal Entry 1. By the time
the next surviving book on double entry was printed (Manzoni 1540), the monetary amounts
were shown in a separate column. Manzonis examples follow Paciolis instructions. Like
Pacioli, Manzoni was a teacher and his textbook was first printed in 1534 but no extant copies
are known to exist. It is the second edition printed six years later that has survived.
11


Exhibit 4: Manzonis Journal

Manzonis journal entries relate to the closing of the profit and loss (pro et danno)
account in the ledger. The numbers 294 to 300 on the left are the consecutive numbers of the
12

journal entries. The two numbers to the left of each journal entry, one above the other are the
pages in the ledger of the debit (upper number) and credit (lower number) entries. The two
tick marks to the left of these page numbers are check marks indicating that the entries have
been made in the ledger. The two slanting lines across the final journal entry were completed
by Geisjbeek (1914) when he included the page in his book on Paciolis bookkeeping treatise.
The lines indicate that no further action is required on that journal entry. In Manzonis 1540
edition, none of the journal entries have been crossed through, presumably because of the
difficulty of printing them in 1540, but the beginning and end of each slanting line is shown
(as in the page included in Geisjbeeks book), indicating that these entries have all been made
in the ledger.
To the left of the name of the account being debited is a decorative P, representing the
word Per. Two slanting parallel lines are placed immediately after the name of the account
being debited in the style proposed by Pacioli but not adhered to by the printer of Summa
Arithmetica, Paganino de Paganini (see, Yamey 1976). The account being credited is
preceded by A. The explanation of the entry is then given, ending with val which
indicates the amount to be entered in the ledger accounts and is followed in the money
column by the amount in Lire, Soldi, Denari, and Picioli. The amounts mentioned in the body
of the journal entries are in different monetary units and have been converted into Lire, Soldi,
Denari, and Picioli for the entry in the money column.
The text above each amount tells why the entries are being made in the ledger
accounts and was probably for the benefits of students rather than a formal part of the journal
entry. Journal entry 298, for example, is described in the money columns as being entered in
order to charge the total expense of salary to profit and loss.
There is not a great deal of difference between the presentation of these journal entries
of Manzoni and how we would prepare the same entries today. Similarly, there is not a great
difference between how Pacioli wanted readers to make entries in the ledger and how it is
done today. While neither author includes any examples of compound entries (where more
than one debit and/or credit entry is involved), such entries are known to have been in use in
Tuscany in the mid-14
th
century (Melis 1962) and by a Venetian merchant in 1437 (Peragallo
1983), and Pacioli refers to them in Chapter 11 of his treatise, as did Manzoni. They have
presumably been omitted by Pacioli and Manzoni for reasons of pedagogy. It certainly makes
it easier for students to understand the process if the focus at this stage is on simple rather
than compound journal entries.
The absence of compound examples means that neither author needed to show how to
make two (or more) entries in the money columns of the Journal, though modern practice
would show the same amount in two separate columns [as shown above in the journal entry
based on Cripps (1995)]. Peragallo reports (1983, p. 99) that in the 1437 compound entry the
credit amounts were in the same (single) column as the debit amounts but were indented.
It should be possible to guide students through the minor changes needed to present
these simple journal entries in a form acceptable today. In doing so, students should see how
we can improve on these layouts and, in the process of doing so, they should become more
aware of and understand better the process of double entry. They could then be shown how to
prepare compound journal entries by simply adding some detail to any of the examples
provided.
Moving away from accounting sources, there are other historical examples and
scenarios that can be used when teaching double entry using an accounting history focus. For
example, in The Merchant of Venice (which was written between 1596 and 1598),
Shakespeare used abbaco (i.e. commercial) arithmetic and algebra (two of the subjects Pacioli
13

spent many years teaching) and Paciolis bookkeeping audit check, the Summa Summarum
3
,
to introduce subtle jokes into the play (Bady 1985). Bady, a university teacher of English and
a Shakespearean and Renaissance scholar demonstrates how the balance sheet equation can be
used to present one of these jokes, the zero value of one of the key characters in the play,
Antonio (p. 25):
4,5




Thus, within 100 years of the printing of Paciolis Summa Arithmetica, the Venetian
method as presented by Pacioli had not just been adopted across Europe, the terms within it
had become sufficiently well-known to the common man and woman as to be included in
plays by the leading playwright of his day.
Reference to the Merchant of Venice could illustrate how quickly double entry
bookkeeping spread from Italy and Bradys conversion of one of Shakespeares rhetorical
equations into the balance sheet equation can be used to demonstrate how even at that time
the concept of <assets = liabilities + equity> was understood, even if it did not become
formally recognised in accounting for another two centuries.
To supplement this material, the tale of Paciolis life and times provides a historical
context for the development of bookkeeping that clarifies the importance of the subject in an
accounting programme. It explains how a Franciscan friar came to be the first to print a book
about bookkeeping something that appears bizarre to modern eyes and brings the subject
to life in a way that our world of computerised accounting is simply not capable of doing for
our students. That is, by positioning bookkeeping at a time when the importance of a reliable
and efficient accounting system was only just beginning to be recognised, students can be
shown why double entry is an important skill and one which, as a result, they are more likely
to seek to possess.
Some accounting faculty include short biographies of Pacioli in their courses, some
going so far as to have course web pages devoted to him see for example, Goldwater (2008)
and Smith (2008). The former also offers students the biographical video on Paciolis life
(www.bus.ucf.edu/goldwater/General/General.aspx) which was prepared for the 500
th

anniversary of the publication of Summa Arithmetica in 1994 by the Academy of Accounting
Historians.
6


3
The Summa Summarum involves finding the total of all the debit totals in the ledger and the total of all the
credit totals and verifying if they are equal. If they are, you can conclude that for each debit entry there is an
equivalent credit entry, and vice versa.
4
The accounting equation as symbolism was introduced in the 18
th
century (Jackson 1956) and algebraic
symbolism (i.e. the use of variable names such as x and y and symbols such as +, -, and =) did not exist
in any consistent form until the 17
th
century (Boas 1966). Shakespeare thus presented algebraic relations
rhetorically, a form as normal to his audience as algebraic symbolism is to us or as bilateral (i.e. T-) accounts
were to bookkeepers and accountants for over 500 years. Because this was the normal way to express such
relationships, Shakespeares audience could understand the humour without any need for explanation.
5
Shakespeare had already rhetoric to present an equation to his audience that demonstrated the zero value of
Antonio in Act IV (Brady 1985: 13).
6
The video reflects what the English-speaking world knew about Pacioli in the early 1990s and so contains some
errors for example, Pacioli is wrongly identified in a painting (he is the one with a line from back to front
across his head) but it does provide students with a visual image to which they can relate.
14

Many books have been written on Paciolis life, the most comprehensive of which in
English is Emmett Taylors No Royal Road, first published in 1942. Many articles have been
published and chapters dedicated to Pacioli have been included in books looking at education,
mathematics, architecture, and the history of accounting. Among these, possibly the most
reliable have been written by Jayawardene (1971, 1998). However, the most reliable Pacioli
biography in English is probably Rankins mathematics PhD thesis (1992). There are no
significant English language biographies prepared by accounting researchers, though there are
a number in Italian, mainly from the 19
th
century but also from the early- and late-20
th

century. So important is Paciolis legacy viewed in Italy that, in 1994, a 500 lira coin was
struck with his image on one side and a stamp was issued in his honour.
As many of these biographical sources are difficult to obtain and none is entirely
reliable, a biography including recently discovered details of Paciolis life can be obtained by
contacting the author.

3. Conclusion
If what has been suggested above is undertaken, students will have the opportunity to gain an
understanding of the reasons why accounting exists. They will be able to understand how it
developed from the most basic system to double entry and started to become formalised
following the publication of Paciolis Summa Arithmetica in 1494. By working through the
material in Paciolis treatise, they will learn the basic processes of double entry bookkeeping
and will become aware of the various records maintained by businesses, be they large or
small. They will learn the differences between sole traders, joint ventures, and partnerships;
and will learn about agency theory.
By reading Geisjbeeks review of the development of bookkeeping since Pacioli, they
will learn how the technique was further developed and became the technique we know today.
They will also learn from a study of the text of Paciolis treatise that fraud, duplicity,
duplicate ledgers, and theft were issues in business in 1494 as much as they are today; and of
the measures in place at that time and of how they compare to those in use today. They can
then be guided in comparing how it was with how it is now and encouraged to explore why
practices have changed while others have largely remained as they were.
They will come to realise that the advice Pacioli offered on these and other issues
means that accounting from the books of original entry to the preparation of the trial balance,
summa summarum, income statement and balance sheet had a role to play in preventing these
practices from its initiation as a formal set of techniques. They will learn that most of the
issues accountants face today are as old as business itself and should begin to understand how
the checks and balances in double entry and in accounting in general are designed with a
specific goal in mind, and that they always have been.
For students taught bookkeeping through a historic lens, the subject should have more
relevance and, consequently, far easier to grasp. This in turn would make it less difficult for
faculty to justify inclusion of double entry in the syllabus. There is space for critical thinking
in a bookkeeping class, if appropriate contexts are developed. Accounting history has the
potential to do so.
In the UK, double entry bookkeeping appears to be no longer generally viewed as an
essential element of an accounting degree. Whether this is an appropriate perspective to adopt
is debatable. Some continue to teach double entry, others only provide a basic introduction to
the subject, others rely on students motivating themselves to learn double entry from
computer-based learning packages, and others exclude it completely from the syllabus.
Those who continue to teach double entry face a serious problem: students generally
find it hard to relate to the topic and find it difficult to master. As a result, they often struggle
with it throughout their studies. This paper has proposed that by setting the teaching of double
13

entry in an appropriate historical context, students may be encouraged to acquire skill in and
understanding of double entry and so perform well in their assessments on the topic. In turn,
they are likely to improve their ability to apply their knowledge of double entry in adopting a
critical perspective to the rest of their studies of accounting.

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