WHO WAS THE FIRST ACCOUNTANT?

Pacioli - The Father of Accounting

Luca Pacioli (1447-1517), the wandering Franciscan monk and mathematician, was a contemporary of Columbus and a friend and collaborator of Leonardo da Vinci. His seminal work, Summa de Arithmetica, Geometrica,Propotioni et Proportionalite, published in 1494, contained a section, "Particularis de Computis et Scripturis" (Details of Accounting and Recording) that described "the system used in Venice". This was four decades after the Gutenberg invention of movable type and printing centers all over Europe allowed Pacioli's Summa to be translated, printed, and spread across the continent.

Pacioli's Summa is the first known complete description of double entry bookkeeping. Three books were to be used: memorandum book, journal, and ledger. Journal entry postings from the memorandum book required debits on the left and credits on the right. Although many currencies existed, Summa required that all entries be translated to a single monetary unit. A trial balance was necessary when the books were closed. The balances from the profit and loss account were entered in the capital account. In other words, Summa described a system remarkably like modern bookkeeping. The Summa was translated into Dutch, German, French, Russian, and English and Pacioli's system spread across Europe. For this reason Pacioli is the "Father of Accounting". Relatively little progress was made beyond Pacioli's Summa for several generations. In fact, it is difficult to identify pioneering accountants before the Industrial Revolution.

From Renaissance Italy to Industrial England

Pacioli's Summa was published not long after Columbus' return from the New World, a key event in the decline of Italian states and the rise of Spain as a world power. First Spain and Portugal and then Holland and England became great sea powers. England gradually gained the upper hand, through trade and imperialism under the Mercantilist theory that colonies provide raw materials and buy finished goods. Industry was based on a crafts system, with wealth based largely on land and merchandising. Thus, except for the vast colonial base, the system was similar to Renaissance Italy.

An important capitalist invention was the joint stock company, precursor to the modern corporation. One of the first in England was the East India Company, chartered in 1600, with monopoly rights between Cape of Good Hope and the Straits of Magellan. During the early years only short-term stock was issued for single voyages, then the stock liquidated and the proceeds divided among shareholders (permanent capital was first raised in 1657). One potential "first accountant" would have been Thomas Stevens, the first Accountant General for East India Company (to 1614). Unfortunately, no surviving accounting records exist before 1657.

Joint stock companies fell into disfavor with the bursting of the South Sea Bubble of 1720 (due to large scale fraud and speculation). Charles Snell may be the "first auditor" for his financial reviews after the South Sea Bubble, but accounting innovation had to wait for English entrepreneurs of the 18th century. Joint stock companies regained their popularity early in the 19th century.

The Industrial Revolution dramatically increased per capita production through mechanization. Eighteenth century England was changed from an agrarian and craft-based society to an industrial power. Cotton textiles were manufactured first, based on Kay's flying shuttle (1733), Hargreave's spinning jenny (1765), Arkwright's water frame (1769), and so on. Perhaps the most significant invention was James Watt's steam engine in 1769. Steam power made modern factories possible.

Each inventor was an entrepreneur with a need for capital and a vision, usually to generate vast personal wealth. A banking system and adequate transportation were necessary components. Banking began in England from goldsmiths safekeeping customer gold and silver and then lending the metals. Customers were given receipts which they used to pay their bills. The Bank of England, chartered as a Joint Stock Company in 1694, became the first central bank. Canal building began in the late 18th century, followed by locomotives from about 1830. With mass transportation the acquisition of large quantities of raw materials and the distribution of finished products over large distances became possible.

The rise in productivity in Britain was dramatic, over 2% a year in gross national product (GNP). In 1750 per capita production was similar around the world. According to Kennedy [1987], if British productivity was 100 in 1750, then that of the Third World was 70 and the rest of Europe was 80. By 1900 British productivity was 1,000. By 1860 Britain produced more than half the world's iron and coal, was responsible for 20% of world trade and 40% of manufacturing trade.

find more in the resources : WHO WAS THE FIRST ACCOUNTANT?

Best hopes ,

Mostafa