Double-entry bookkeeping

Double-entry bookkeeping

The most commonly used bookkeeping system today is called double-entry bookkeeping. This system looks at two dimensions of every business transaction. Thus, every account has two sides. One side is the debit side, and the other is the credit side. Each side has columns for dates, explanations of any changes in the account, and the amount of money involved.

Scholars have traced the origin of double-entry bookkeeping to Italy, where it was used by merchants in the 1300's. The first known explanation of the system appeared in 1494 in Summa de Arithmetica, Geometria: Proportioni et Proportionalita, a mathematics book written by Luca Pacioli. Pacioli taught mathematics at universities in several Italian cities, including Venice. He was probably a friend of Leonardo da Vinci.

Excerpt adapted from the "Bookkeeping" article, The World Book Encyclopedia © 1999