StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Luca Pacioli: The Father of Accounting - Essay Example

Comments (0) Cite this document
Summary
Luca Pacioli can be called the father of accounting as we know it today. The major concepts were first published in Italy in 1494. Incidentally they were discussed in a book he wrote on applied mathematics entitled “Summa de Arithmetica, geometria, proportioni et Proportionalita”…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.3% of users find it useful
Luca Pacioli: The Father of Accounting
Read TextPreview

Extract of sample "Luca Pacioli: The Father of Accounting"

Download file to see previous pages
Accounting can be termed as a means for measuring and recording the financial value of the assets and liabilities of a business. It also allows monitoring of these values as they change with the passage of time. (Ahmed Raihi-Belkaoui, 2004 p.10)
Business assets are those things that belong to the business that have a positive financial value and are used by the business for carrying out its normal activities. Examples of assets include land, buildings, machinery, vehicles, equipment, stocks,
Business liabilities are those things that belong to the business but contrasting to assets, have a negative financial value i.e. they require the payment of money by the business at some point in the future. Examples of liabilities include unpaid taxes, bills, wages, overdrawn bank accounts and creditor’s money e.t.c.
The equity of a business is the value of the assets less the value of the liabilities. So basically equity is the differential (usually monetary) value that would be left if all the assets were sold and used to pay off all the liabilities. (Ahmed Raihi-Belkaoui, 2004 p.11)
The equity along with assets and liabilities are financial dimensions that are time specific. The financial statement that presents this information is known as the balance sheet. Therefore the balance sheet is a statement of the assets, liabilities and equity of a business at a particular point of time. (Donald E. Kieso. 2006 p.38)
Now let us move to the relation between the three entities that is represented by what is called the "accounting equation". (Donald E. Kieso. 2006 p.38)
OE = A - L
Here
OE - Owner's Equity
A - Assets
L - Liabilites
So we can say that equity is the value of assets minus the value of liabilities. Rewriting the same equation we have:
A = L + OE
Meaning that the value of the assets is equal to the value of the liabilities plus the equity.
So by definition the accounting equation holds true for all cases. Now a balance sheet is usually divided into two sections, one section for assets and the other section for the liabilities and the equity (according to the second equation).
Since the balance sheet is time specific it is also known as the statement of financial position. Two other major financial dimensions that cover a period of time against a particular point of time are income and expenses. (Donald E. Kieso. 2006 p.50)
The income or revenue of a business is the total of those items that increase the value of the assets without corresponding increase in liabilities or equity such as revenue from the sale of goods, services, equipment, interest received, rent and capital gains.
The expenses of a business are those things that reduce the value of the assets without corresponding reduction in the liabilities or equity such as the cost of raw materials, wages, stock, rent, electricity bills, telephone, taxes, and depreciation.
The income and expenses of a business are dimensions that relate to a specific period of time and the financial statement that is used for presenting this information is the "income statement" which is the statement of income and expenses of a business during a specific period.
Now if we want to represent the relationship between the assets, the liabilities, the equity, the income and the expenses we can look at the equation given below:
A = L + OE + (I - E)
According to this equation the value of the assets is equal to the value of liabilities plus equity plus the excess of income over expenses.Rewriting this equation we have:
A + E = L + OE + I
This equation shows that assets plus expenses equals the value of the liabilities along with equity plus the income. The second equation is ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Luca Pacioli: The Father of Accounting Essay Example | Topics and Well Written Essays - 2750 words”, n.d.)
Luca Pacioli: The Father of Accounting Essay Example | Topics and Well Written Essays - 2750 words. Retrieved from https://studentshare.org/miscellaneous/1532470-accounting-information
(Luca Pacioli: The Father of Accounting Essay Example | Topics and Well Written Essays - 2750 Words)
Luca Pacioli: The Father of Accounting Essay Example | Topics and Well Written Essays - 2750 Words. https://studentshare.org/miscellaneous/1532470-accounting-information.
“Luca Pacioli: The Father of Accounting Essay Example | Topics and Well Written Essays - 2750 Words”, n.d. https://studentshare.org/miscellaneous/1532470-accounting-information.
  • Cited: 1 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Luca Pacioli: The Father of Accounting

Luca Signorelli and His Work at Orvieto

...Early Renaissance period saw the works of art of Luca Signorelli, an artist during that period. He did a lot of paintings in different cities including Arezzo, Orvieto, Florence, Rome, and Perugia. As a painter, Luca gained recognition for his capacity to use foreshortening. The most recognized work of Luca Signorelli involves the massive work in Orvieto Cathedral. Though Luca had done other works, the works at Orvieto Cathedral made remarkable appreciation of all the work done by Luca. He worked in Rome from 1478 to 1484; he helped in the painting of the Sistine Chapel. In addition, the testament of Moses can entirely be associated with him. In his painting, Luca brought out themes clearly. This assignment will focus on the themes...
6 Pages(1500 words)Essay

Father Involvement

...? The Importance of Father Involvement in the Family The Importance of Father Involvement in the Family The father has always been important in the family because it is his role to support the family in all aspects especially in terms of finances. Primarily he is the breadwinner of the family as he works to provide the needs of his spouse and children. It has been part of the tradition of various races that the male adults are the ones who should take care of the family. By definition, it is the male parent who is called as a father. He is needed for an offspring to be formed together with the mother or the female parent. He contributes the sperm cell which contains the Y chromosome while the X chromosome comes from the mother...
8 Pages(2000 words)Research Paper

Luca Pacioli as One of the Greatest Men

... & Hoggett, 2012). This new technique utterly revolutionized economy and business besides prompting Luca Pacioli to be a celebrity (Hogg, Tilling, Edwards, Medlin & Hoggett, 2012). Since the time of authoring his book to date, numerous people in diverse fields and especially accounting refer Luca Pacioli as “The father of accounting” (Hogg, Tilling, Edwards, Medlin & Hoggett, 2012). This is because of incomparable contributions he made in this field regardless of his humble background. Consequently, Summa became one of the most read books in Italy besides being the first for publication by Gutenberg Press (Hogg, Tilling, Edwards, Medlin & Hoggett, 2012). The book’s content comprised of “book keeping methods” and knowledge on how...
1 Pages(250 words)Essay

Father Divine

... Father Divine Rev. M.J. Divine was born around 1880’s with sources suggesting he was born in Georgia. In the 1920’s, Divine was renowned for his International Peace Mission. By 1930’s, he hit the headlines of local news for the big crowds he was attracting and for his frequent conflicts with the authorities. His church attracted both the whites and the black when racism was highly upheld. He had several international missions during the 1900s in different destinations (Father Divine 1). According to Boccella, the movement faced criticism for its requirements to its followers and the misconducts associated with the movement (1). William Randolph Hearst criticized the movement as being a cult. Hearst criticized it for making its followers...
1 Pages(250 words)Essay

Luca Pacioli

Luca Pacioli Affiliation Corse Introduction Luca Pacioli was born around 1445 in Tuscany. He was a mathematician who taught and wrote in various fields including theology, mathematics, architecture, military strategy, games, and commerce. Although he did not discover double-entry accounting, he excellently explained a method used by Venice merchants in the Italian Renaissance. His system comprised most of modern accounting practices such as the use of journals, memorandums, and ledgers.
Understandability
Pacioli, being a Franciscan monk understood the importance of honesty and, therefore he used his Christianity attributes to incorporate them into the finance industries. I find his Christianity perception of things as a ma...
1 Pages(250 words)Essay

International Accounting

The Profit and Loss for 2006 of PSA Peugeot Citroen is presented Vertically as depicted in its annual report. Further, there are ‘Functional breakdown’ of expenses, as the headings of expense accounts are as per functions performed, e.g., Cost of Goods and Service sold, Selling, General, and Administrative Expenses, Research and Development Costs, and like that.

Legal Reserve is the reserve as required by any national law of the country of the European Union. This is depicted in the subhead of ‘Retained Earnings’ under ‘Equity’ of PSA Peugeot Citroen's Balance Sheet in accordance with Article 9 of the Fourth Schedule.

“Legal reserves are a mechanism whereby management...
10 Pages(2500 words)Case Study

Accounting & Financial Management

AWB’s operations can be categorized into areas ranging from ‘pool management services’ to ‘harvest financing’, and ‘International commodity management’. Only a company with such a big range of activities and financial outlays can become the benchmark for an equally big company like ‘Woolworth Limited’.

The performance of an entity can be better analyzed through its profitability analyses. The profitability ratios like Gross Profit ratio, Net Profit Margins, Return on assets (ROA), and Return on Equity (ROE). The calculations of such ratios are shown in the attached annexure. The Gross Profit ratio measures the percentage of each pound or dollar of sales remaining aft...
10 Pages(2500 words)Assignment

Accounting for Leases

...IAS 17-ACCOUNTING FOR LEASES INTRODUCTION: A Lease may be defined as a contractual arrangement in which a party owning an asset (Lessor) provides theasset for use to another or transfers the right to use the asset to the user (Lessee) for an agreed period of time. Leasing essentially involves separation of ownership from the economic use of an asset. MAIN FEATURES OF IAS-17 1The objective of IAS17-Accounting for leases is to prescribe appropriate accounting policies and disclosures for Lessees and Lessors with respect to Finance and operating leases. According to IAS 17, a lease is classified as Finance lease if it transfers substantially all the risks and rewards associated with the ownership of the asset to the Lessee...
6 Pages(1500 words)Assignment

Accounting systems and Assurance

The allocation of resources is dependent on the information regarding the financial condition of the firm. Here comes the role of accounting, which provides all the required financial information to the investors through several financial reports. There There are two classifications of accounting 1) financial accounting and 2) management accounting. Financial accounting is the one which furnishes all the financial information to the investors and management accounting is used at the micro-level where the internal allocation of the funds takes place. Accounting is one of the most crucial components of any organization as it provides all those financial information that is used to make the economic and financing decision making.&nbs...
9 Pages(2250 words)Coursework

Evaluation of Performance of a Bank Using Published Accounting Data

...Table of Content Introduction: 2 Background 3 Thesis ment 4 Main Body 4 Conclusion 6 Limitations 7 Recommendations 7 Bibliography 8 Evaluation of Performance of a Bank Using Published Accounting Data Introduction: Banks are the global industrial powerhouses1 and they have introduced very complex and risky products and services. During its operation, every bank is exposed to credit risk, liquidity problems, interest risk, market risk, operational and management risk.2 The collapse of banking industry severely influences the world financial system, which means that it is very important to evaluate the performance of the banks. There are different parameters based on which performance of a bank can be evaluated such as financial management...
7 Pages(1750 words)Case Study

Progress on G20 Summit on Accounting Standards

The said declaration contains the results of the discussions of the G20 leaders related to the current financial crisis. It contains what the G20 believes are the causes of the financial crisis and the actions to be taken.

The said declaration contained the short-term (classified as immediate actions) and medium-term actions that the G20 members think should be done to achieve true financial reforms. As part of the medium-term actions, the declaration states that “the key global accounting standard bodies should work intensively toward the objective of creating a single set of high-quality global standard”. It also stated that “regulators, supervisors, and accounting standard setters, as appropriate, s...
9 Pages(2250 words)Lab Report

Accounting for Managers

ii) In the audit report, the external auditors express their opinion about the fairness of the financial statements of the company and whether they have been presented as per the generally accepted accounting principles (GAAP) in the USA. The opinion can be unqualified opinion when no financial misstatements are discovered, Qualified opinion when there are one or two instances of non-compliance, Adverse Opinion when financial statements are found to be wrongly stated and Disclaimer when there are hindrances in performing audit (Credit Research Foundation, n.d.; The University of Michigan-Flint, 2003).

iii) The audit of external reports helps in evaluating the risk management policy and control procedures of an organizat...
6 Pages(1500 words)Assignment

Alternative Methods of Accounting

...The accounting profession was formally founded in 1494 when the Father of Accounting, Luca Pacioli, introduced the double-entry system in the textbook Summa de Arithmetica, Geometria, Proportione et Proportionalite (Weygandt & Kieso & Kimmel, 2002). Accounting has always been a self regulated profession. After the 2nd half of the 20th century changes in accounting occurred due to the influence of private organizations such as the FASB. In the United States accountants followed the generally accepted accounting principles (GAAP) to guide their every day work. Accounting is a discipline that is very strict in its ways and does not welcome change well. In the aftermath of the Enron and WorldCom scandal the government had to force change...
8 Pages(2000 words)Article

The Impact of Standardization on the Accounting Industry and Professionals in Spain

Standardization involves the formulation and implementation of technical standards essential in maximizing and enhancing safety, repeatability, quality, compatibility, and interoperability (Shailaja 319). For decades, the need for a smooth flow of commerce and trade led to the standardization of goods and services.
The process of standardization entails the development, formulation, and relevance of established standards. It involves the incorporation of scientific research and the utilization of experiences to establish the required and precise technical requirements for a particular aspect of innovation and technology. The result of the study and experience is a “standard.” A standard is a document formulated by...
13 Pages(3250 words)Case Study

The Nature and Significance of Listening Skills in Accounting Practice

 In addition to facilitating success in the accounting profession, listening skills contribute to social adjustment and participation. The major topics covered by the researchers are communication skills, accounting education, listening and communication practices. According to the researchers, most institutions consider listening skills as generic skills (Stone & Lightbody, 2012, p. 375). Teachers in these institutions do not consider listening skills as important skills in accounting practice. Most universities place emphasis on technical skills. Surveys on the importance of listening skills have put pressure on universities to raise awareness of these skills (Ameen, Jackson & Malgwi, 2010, p. 34). The researchers b...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Luca Pacioli: The Father of Accounting for FREE!

Contact Us