III. The Business as Accounting Entity: The ratio (account)
1. The historical development of accounting. — The introduction of accounting was of the greatest significance for the full development of the capitalistic enterprise.
We know that the artisanal organization of medieval trade (and anything like bookkeeping was unthinkable for other branches of business life) found its expression in an incomplete and highly personalized bookkeeping. The sparse and confused collection of notes which characterizes the German trade books of the 14th and 15th centuries had, as sole object, to recall to the memory of the business manager particular events and conditions in his business. The books were memoranda in the most primitive sense of the word.
The public household was the place where an organized or “objective” bookkeeping, comprehensible to third parties took root.
Naturally, the Italian city communities took the first steps. From the 13th century on, perhaps even earlier, orderly business management starts to appear. Inventories of movable and real property are taken, the tavole delle possessioni in Florence, in two copies; special officials (notai) are appointed to provide annual reports on the public debt (Milan, Pisa, Florence) . Strict supervision of communal receipts and payraents is introduced. In 1225 the Milanese Podesta orders a monthly check on the government cash and requires officials to submit monthly accounts. All statutes contain bookkeeping regulations: the Breve pisano of 1286, for example, requires two separate books, one for receipts and one for payments; in Venice monthly audits and surprise cash checks shall take place. Balance sheets were constructed for the Italian states in the 14th century: we have them for Florence from the years 1336-38, for Treviso from 1341, for Rome from 1358, for Milan from 1463. Continue reading