How accounting works, and where it came from
Accounting12 explains the reasons behind the numbers in plain English: why debits sit on the left, how an airline counts the miles it owes you, and how a book printed in Venice in 1494 still shapes the way accounts are kept.
A customer’s account
Dareshould give
- Cloth sold25
- Pepper sold15
Total40
Avereshould have
- Cash received30
- Wool in trade10
Total40
A short history of keeping accounts
Eight moments that shaped accounting. Each one is told in full in an article on this site.
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Around 8000 BCE
Farmers in Mesopotamia start tracking grain, oil and sheep with small clay tokens, one token for each item. Over thousands of years the system grows into clay tablets and, in time, writing.
Full story: Clay tokens -
1400s
Merchants in Italian trading cities, especially Venice, give each account two facing pages, with dare on the left and avere on the right. Debits still sit on the left today.
Full story: Debits on the left -
1494
Luca Pacioli, a Franciscan friar and mathematician, prints Summa de arithmetica in Venice. Its 36 short chapters on bookkeeping are the first printed guide to the double-entry method.
Full story: Luca Pacioli -
1752
Britain drops 11 days to change calendars, and the start of the tax year moves from late March into April. One more adjustment in 1800 fixes it at 6 April, where it still is.
Full story: Fiscal years -
1834
Workers burn a pile of old tally sticks, the notched wooden records the English treasury had used for centuries. The fire spreads and destroys most of the old Palace of Westminster.
Full story: Accounting words -
1938
Physicist Frank Benford shows that in many real-world data sets about 30% of numbers start with 1. Auditors now use the pattern to spot invented figures.
Full story: Benford’s Law -
1951
J. Lyons and Co., a British tea-shop and bakery company, runs its first office job on LEO, a computer it built for business work.
Full story: Before computers -
2018
New revenue rules, IFRS 15 and ASC 606, take effect. Airlines that use them split each ticket price between the flight and the miles it earns.
Full story: Airline miles
Every article, by topic
Pick a topic, or search for a word like ledger, Venice or balance sheet.
Showing all 10 articles.
Accounting history
How people kept records, from clay tokens to the first printed bookkeeping guide.
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Reading time: 8 minutes
How Ancient Mesopotamians Kept Accounts With Clay Tokens
Around 8000 BCE, farmers in Mesopotamia kept count with small clay tokens, one for each sheep or measure of grain. See how the tokens led to sealed envelopes, tablets and writing.
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Reading time: 7 minutes
Luca Pacioli: The Monk Who Wrote the First Bookkeeping Guide
A Franciscan friar printed the first guide to double-entry bookkeeping in Venice in 1494. What he wrote, what he did not invent, and how he came to work with Leonardo da Vinci.
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Reading time: 7 minutes
What Accountants Did Before Computers
Quill pens, the abacus, adding machines and punched cards: how books were kept and checked by hand until a British tea-shop company built the first business computer.
Core concepts
The basic rules of bookkeeping, and the reasons behind them.
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Reading time: 7 minutes
Why Debits Are on the Left: The Origin of the T-Account
The left side is a custom, not a rule of mathematics. It comes from Italian ledgers that gave every account two facing pages, and the T-account is a sketch of that layout.
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Reading time: 7 minutes
Why Most Companies Don’t Start Their Year in January
Microsoft ends its year on 30 June and Walmart on 31 January. Why businesses close their books in quiet months, and why the UK tax year still starts on 6 April.
Real-world cases
How airlines, museums and famous brands handle unusual items in their accounts.
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Reading time: 6 minutes
How Airlines Account for Frequent Flyer Miles
Every mile you earn is a promise the airline still owes you. See how part of each ticket price is held back as a liability, and what happens to miles nobody uses.
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Reading time: 6 minutes
How Museums Record Priceless Collections
Many museums put no money value on their collections at all. How heritage assets are recorded, why they are not depreciated, and why insurance values are a separate matter.
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Reading time: 6 minutes
Why Coca-Cola’s Brand Value Isn’t on Its Balance Sheet
A brand built through decades of advertising stays off the balance sheet, while a brand that is bought goes on it. The rule behind the gap between book value and market value.
Accounting words
Where common accounting terms came from, and what they first meant.
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Reading time: 6 minutes
Where Accounting Words Come From: Ledger, Audit, Debit and More
Audit comes from the Latin for hear, budget was once a small leather bag and bankrupt meant a broken bench. The stories behind 17 everyday accounting terms.
Numbers and patterns
Patterns hidden in numbers, and how auditors use them to check records.
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Reading time: 6 minutes
Benford’s Law: How Number Patterns Expose Fake Accounts
In many real-world data sets, about 30% of numbers start with 1 and under 5% start with 9. Why that happens, and how auditors use it to spot invented figures.