Italian City States

• 1. Genoa

  • A major center for commercial activity
  • Assumed the concept of a "business entity"
  • Used "money" to record transactions, so unlike items could be compared in common terms
  • Distinguished the difference between "capital" and "profits"
• 2. Florence

  • A major artistic center
  • Gold florin was accepted as standard coin across Europe
  • Developed large associations and partnerships that pooled capital
  • Distinguished between individual partner's capital accounts
  • Allocated profits and losses between partners
• 3. Venice

  • A key commercial and port city
  • The business cradle of Europe, and it was here among merchants that double-entry accounting was invented and practiced
  • Perfected double-entry accounting
  • The "Method of Venice" is the true ancestor of modern accounting.