Practice Activity 1.2 Accounting practices in the Medieval Era Can you remember some facts about accounting practices in the Medieval Era?
Suggested answers to practice activity 1.2 Some facts about accounting practices in the Medieval Era include:
The introduction of Zakat in 624 AD which led to the development of accounting practices for Zakat calculation and payment emanating from business and profit-making.
Bookkeeping system in Muslim society shows that there was an efficient method of accounting before the 13th century AD (1201 AD to 1300 AD). Al-Mazenderany (1363), as cited in Zaid (2004), was among the first Muslim scholars who showed how bookkeeping and accounting were practiced in Muslim society. Other Muslim scholars who recorded the accounting method include Al-Hariri, Al-Khwarizmi, Al-Nuwayri, Ibn Khaldun, and Al-Qalqashandi (El-Halaby & Hussainey, 2016).
Based on a collection of 300,000 Jewish manuscript fragments obtained from the Cairo Genizah in the storeroom of the Ben Ezra Synagogue in Egypt), by 11th Century AD (1001 AD to 1100 AD), Jewish bankers used the double entry bookkeeping system to record business transactions (Scorgie, 1994).
In Europe, by the 13th Century AD (1201 AD to 1300 AD), there was a shift from trade by barter to a money economy.
In Europe, the Farolfi ledger of 1299 to 1300 AD showed double entry in recording transactions. Giovanno Farolfi & Co. was a firm of Florentine merchants in Nimes. They engaged in moneylending (Lee, 1977).
Merchants recorded transactions financed by bank loans with the aid of bookkeeping.
The Messari, treasurer's accounts of Genoa's city, an oldest documented evidence of complete double entry bookkeeping existed in 1340 AD (Wang, Zhao, & Hooper, 2017). The merchants that used the Messari accounts would never debit unless they credited. Also, balances were carried forward from the previous year, creating a flow of accounting information (Mills, 1994).
In 1458 AD, the work titled 'Della Mercatura e del Mercante Perfetto' by Benedetto Cotrugli described the double entry bookkeeping system (Sangster & Rossi, 2018). The work was not published until 1573 AD.
The published text titled 'Summa de arithmetica, geomerica, proportioni et proportionalita' written by Luca Pacioli in 1494 AD documented the system used by Venice merchants to record business transactions (Ovunda, 2015).
Sir Pacioli recommended the Venecian method of double entry bookkeeping. The main books of the account associated with this form of bookkeeping include the memorial (memorandum), the Giornale (Journal), and Quaderno (ledger) (Sangster, 2016).
Can you research more facts about accounting in the Medieval Era?
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