Guidance and Knowledge for Value Investors
Luca Pacioli is considered the father of accounting. A friar living during the 1400’s and a mathematician, he developed the dual entry system of accounting and therefore is credited as the father of modern day accounting.
In accounting the term dual entry is used often. Other names include Double Entry and Offsetting Entry. It refers to the process of entering an economic transaction as an equation. Remember in math an equation refers to a two sided mathematical statement. Examples include 4= 2 X 2 or more complex equations such as E= MC squared.
A quick and easy way to determine the doubling of value for a given sum based on an interest rate is the Rule of 72. This simple formula has three factors. The first is the interest rate; the second is the amount of time in years to double the value and of course the number 72.