This week’s video gives an overview of each chapter in Luca Pacioli’s seminal bookkeeping treatise, and focuses on the last steps of the accounting cycle.
Pacioli covered many special topics of accounting, including partnership accounting, petty cash, year-end rollover, statement production, error correction and more.
An interesting point is how short the description of financial reporting is. The trial balance is the only financial report produced, and used by the owner to understand the status of the business. So although his book describes so much of accounting, this one aspect–the actual use of the financial data–is very limited.
One other interesting point is that his description of closing includes effectively rebuilding the ledger from scratch; ensuring that every balance is supported by all the required transactions, that all transaction have been included, and all arithmetic is accurate.
This is episode 121 of Conversations with Kip, the best financial system vlog there is.