#Accounting Archives – Page 2 of 9

April 23, 2022April 23, 2022

S is for Summa di Arithmetica

Pacioli also created a font. This Majuscule seems especially appropriate.

Having just spent the past two months analyzing a 1494 accounting textbook, it seems natural to devote one my alphabetic letters to the greatest math teacher of the Renaissance age–Luca Pacioli. I stumbled upon him and his work last year for the letter “P,” so I’m not going to rehash his biography.

Luca Pacioli woodcut from *Summa*, his 1494 600-page math textbook.

Nor will I tell you the secrets of my 35-page treatise on how this chapter on double-entry bookkeeping for Florentine wool merchants reveals their pious contract with heaven and the Catholic church. Feather Beds and Jesus may just be my next book, who knows? What I will talk about is why this work was so revolutionary, despite accusations of plagiarism and critics calling it of “little or no value.” Boo on them!

Free the Numbers!

If numbers give you a headache, I apologize in advance. But we have to talk about numbers. Perhaps you aren’t crazy about multiplying large numbers, like 9876 * 6789. That’s what calculators are for. Now imagine that it’s the year 1490 CE, and you’re still using Roman numerals, and you don’t have a calculator. You have to multiply IXDCCCLXXVI * VMDCCLXXXIX. Can you imagine? There were, apparently, ways to multiple Roman numerals that involved writing them in columns, doubling and halving, then crossing out odds and evens. You would be desperate to find an easier way. Welcome to Hindu-Arabic numerals.

Pacioli’s explanation on how to multiply 9876 & 6789, from *Summa*.

April 30, 2021May 28, 2021

Z is for Zero

The Hindu concept of zero, the void, the circle. Graphic from pparihar.com.

A circle is an infinite number of points all equally distant from a single center. That definition came from Euclid, a Greek, although the Greek’s didn’t use zero. Aristotle was afraid to divide by the void because it wasn’t descriptive of the real world.

The Chinese and the Sumerians used placeholders in their counting, adopting different marks for the tens and the 60s digit, since Babylonians used base 60. But they didn’t have a zero.

The Mayans had a zero–they used base 20–which allowed them to produce large astronomical calculations that generated accurate solar and lunar calendars using only sticks. But their isolation prevented trade, which limited their civilization.

The Romans had zero, of course! Nulla. The Romans had sophisticated plumbing and developed roads that lasted for millenia. But Romans disdained to use nulla in their numbering systems, so even though their business records were hierarchical and detailed, they were limited. Growth is limited if a number like 397,654 is CCCXCVMMDCLIV.

The Arabs developed zero; they developed algebra. But the Arabs learned it from the Hindus.

http://1.bp.blogspot.com/-Rn5ziNDI1kk/UN4HBQcfF8I/AAAAAAAAAII/j746CCLUC6E/s1600/indian_zero.gif — Graphic from Pparihar.com.

April 28, 2021April 29, 2021

X is for XBRL

I didn’t know anything at all about XBRL last week, but it’s making my Excel Ninja fingers twitch. For every blogger handling the “A to Z Challenge,” this is the one that really gives us nightmares–X. (They’re out there…Xena, Xolotl…) I briefly considered “X-axis,” but that’s not really accounting-related, or “eXpense,” but that’s not really an “X.” I came across this newfangled thing: XBRL. Y’all, it’s the bees knees!

XBRL: Waddizzit?

You know how financial reporting produces paper? Lots of paper? Lots and lots? The computer revolution gave companies the ability to do all their financial data collection and reporting online. Spreadsheets–primarily Excel, but also initially Lotus 1-2-3 and recently Google Sheets–revolutionized the way companies can keep track of and analyze everything.

Financial statements, thanks to GAAP (see Letters E, and G) are also fairly standardized. Assets are on the what? (See Letter “D”–left!) Even the account names on the balance sheet and income statement are pretty standardized–Current Assets, Fixed Assets, Accounts Payable, and so on. It makes it easy for accountants to find and read other people’s statements.

Yet the devil is in the details.