Notational Outline of Luca Pacioli's
Treatise on Double Entry Bookkeeping
PARTICULARIS DE COMPUTIS ET SCRIPTURIS1
(Details of Reckonings and Their Recordings)
compiled by Kenneth W. Brown, Ph.D., CPA, CGFM
|1||Those Things Necessary to the Successful Businessman. Methods of
Properly Keeping a Ledger and Journal in Venice and Elsewhere.
Three keys to successful operation of a business:
The debit and credit method should be used.
"Where there is no order, there is chaos."
(In this chapter, Pacioli indicated that the treatise was written so that "...the respectful subjects of the Duke of Urbino may have all the rules that successful businessmen require.")
|2||The First Part of This Treatise: The Inventory--What It is and How
It Should be Taken by Businessmen.
|3||An Example of an Inventory with All Its Formalities|
|4||Warnings and Helpful Advice to the Successful Businessman.
|5||The Second Part of This Treatise: Disposition--What Is to be
Understood by It, What It Consists of in Business, and the Three Principal
Books of Businessmen.
Three Principal Books:
|6||The First Book, Called the Memorandum, Scrap Book, or Household Expense Book. What Is to be Understood by It, How Entries Should be Made in It, and by Whom.|
Numbering the pages of the books:
|8||How Entries Are to be Made in the Memorandum, With Examples.
|9||The Nine Ways in Which It Is Customary for Businessmen to Buy. The
Goods Which It Is More or Less Necessary to Buy on Time.
(A tenth way was omitted above but mentioned in Chapter 19)
"Note that there are as many ways to sell as to buy. Knowing the ways of buying, you will understand how to sell. Therefore, I need not explain ways of selling."
Audit Trail Revisited--
|10||The Second Important Business Book Called the Journal. What It Is
and How It Must be Kept in an Orderly Way.
|11||The Two Expressions Used in the Journal, Especially in Venice: One
Called Per, and the Other A, and What Is to be Understood by Them.
|12||How to Enter and Arrange Items in the Journal by Means of Debit and
Credit Entries, With Many Examples. The Two Other Expressions Used in the
Ledger, the One Called Cash and the Other Capital, and What is to be
Understood by Them.
"In the name of God enter in the Journal the first item of your Inventory which is the quantity of money that you possess."
Concept of Capital--
Natural Account Balances--
Non-Cash Asset Valuations--
Recording and Posting Marks--
|13||The Third and Last Principal Business Book Called the Ledger. How
It is to be Kept Double With Its Index, or Single Without.
|14||Posting Entries from the Journal into the Ledger, and Why for Each
Entry in the Journal There Are Two Made in the Ledger. How Entries in the
Journal Should be Cancelled. The Two Ledger Page Numbers Which Are Placed
in the Margin of Each Entry.
|15||The Way in Which Cash and Capital Entries Should be Posted in the
Ledger. The Date Which Is Written at the Top of the Page According to
Ancient Custom. Changing the Date. How to Arrange the Space on the Pages
for Small and Large Accounts in Accordanace With the Requirements of the
|16||How Entries Relating to Merchandise Should be Posted to the Debit
and Credit in the Ledger.
|17||The Keeping of Accounts With Public Offices, and the Municipal Loan
Bank in Venice, Which Is Governed by Districts.
|18||How to Keep Your Accounts With the Office of Exchange in Venice.
How to Make Entries Relating Thereto in the Memorandum, Journal, and
Ledger. Information About Loans.
Doing Business with the Office of Exchange--
A common proverb says: "One who does nothing makes no mistakes; one who makes no mistakes does not learn."
|19||How to Make the Entries in Your Principal Books for the Payments
Which Have to be Made by Draft or Through the Bank.
Recording payments of liabilities--
Recording of sales--
|20||The Well Known and Peculiar Entries in Business for Trading and
Partnership and How They Should be Entered in the Business Books. Simple
Tradings and Dates, Then Complex Tradings, Examples of Each in the
Memorandum, Journal, and Ledger.
Three kinds of trades [exchanges of goods]--
Two methods of recording trades--
|21||The Well Known Account Called Partnership--
Segregation of Cash:
Segregation of Partnership Accounts:
|22||The Entries for Each Kind of Expense; for Example, Ordinary and
Extraordinary Household Expenses, Business Expenses, and Wages of Clerks
Classification of expenses--
[Ending inventories are not mentioned directly by Pacioli. The balance closed to profit and loss appears to be net amount of sales, cost of sales, and beginning inventory. Since, in Chapter 34, Pacioli refers to the need to carry forward the "merchandise account" to the new accounting period, hemust be alluding, at various times, to either a "merchandise asset" and a "merchandise revenue and expense" account throughout the Treatise].
Natural Account Balances:
Ordinary Household Expenses:
|23||The Order and Manner in Which the Accounts of a Store Should be
Kept. How the Entries Should be Made Separately in the Authentic Books of
the Owner and Those in the Store.
Business Entity Concept:
Another proverb: "He who does business without knowing all about it, sees his money go like flies."
|24||Posting the Entries With the Bank in the Journal and Ledger. Bills
of Exchange--Whether You Deal With a Bank or as Banker With Other Persons,
Receipts for Drafts--What Is Understood by Them, and Why They Are Made Out
|25||The Income and Expense Account, Which is Usually Kept in the
"In some areas, it is customary to keep the Income and Expense account in a separate book which is balanced when the authenticated books are balanced. This custom should not be criticized, but it requires more work."
|26||How Entries Relating to Trips Should be Made in the Business Books.
Why, of Necessity, There Are Two Ledgers for This.
Two Types of Trips--
Separate books for transactions during the trip--
|27||The Well Known Account Called Profit and Loss, or Profit and
Deficit. How This Account Should be Kept in the Ledger, and the Reason Why
It Is Not Placed in the Journal as the Other Accounts.
[Pacioli's word choice implies that all accounts should be closed to capital; logically, he meant only those accounts that contained revenues and expenses should be closed. In Chapter 34, Pacioli explains how to transfer ending asset, liability, and capital accoutns to the new Ledger].
|28||How Ledger Accounts Should be Carried Forward When They Are Full.
The Place to Which the Remainder Should be Transferred, in Order to Avoid
Fraud in the Ledger.
|29||How to Change the Year in the Ledger Between Entries When the Books
Are Not Closed Every Year.
|30||How to Abstract an Account for a Debtor or an Employer if You Are
the Manager or Agent for the Administration of His Property.
Statements of Account--
|31||How to Correct One or More Entries in a Place Different From That
in Which They Should Have Been. This Usually Happens Through
Correcting Accounting Errors--
|32||How the Ledger Should be Balanced and How the Accounts of the Old
Ledger Should be Transferred to the New Ledger: the Manner of Verifying It
With Its Journal, Memorandum, and Other Documents.
Transferring Balances to the New Ledger--
Procedure Prior to Transferring Balances--
|33||How to Record the Transactions That Might Occur While Balancing the
Books. Why No Entry Should be Changed or Made During That Time in the Old
Transaction Cutoff Procedure:
|34||The Way to Close All Accounts of the Old Ledger. The Preparation of
the Trial Balance, Which Totals All of the Debits and Credits. Closing
to Profit and Loss--
Transferring Balances to the New Ledger--
Preparation of a Trial Balance--
|35||How and In What Order Manuscripts, Confidential Letters, Policies,
Processes, Judgments, and Other Important Instruments Should be Kept, The
Registry of Important Letters.
[In this chapter, Pacioli outlines detailed suggestions on how to mail and maintain files of correspondence, and how to keep a record book of "...those things which you might forget, and which would cause you loss."]
|36||Summary of Rules and Ways of Keeping a Ledger.
|37||Items Which Should be Entered in the Ledger.
[In this final chapter, Pacioli outlines all the important types of transactions that must be entered in the Memorandum book, recorded in the Journal, and posted to the Ledger].
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