To resolve the issue of negative numbers i.e., to undertake a function similar to subtraction through debit and credit, Luca employed a very modern technique: Uno Reverse!
Let us understand this through a simple chronology of events.
Till Now…
We used debit and credit tags only on the basis of category i.e., debit assets and credit equity & liabilities.
But, Luca was a European (Italian to be specific) and his people were yet to accept the existence of negative numbers or, the function of subtraction.
Thus, the idea of distributing tags based on category alone was a no-go since calculations in the categories include both addition and subtraction.
Expanding thoughts into a Second Dimension
In an effort to resolve the issue, Luca dug deep and decided to expand the usage of his tags debere and credere (debit and credit respectively) into a second dimension: increase and decrease.
For increase, he let things stay as they were i.e., debit tag would be used to denote an increase in Assets and credit for an increase in Equity-Liabilities.
What about a decrease in their value? How did he make that work?
He couldn’t just ignore it, right?
For Decrease: Uno Reverse
To finally put an end to the issue, Luca simply used the debit tag to also include a decrease in equity & liabilities and the credit tag to include a decrease in assets.
Not to forget, the use of these tags must always satisfy a condition: debits = credits.
This reversal of tags, coupled with the condition that debits must equal credits, turned out to be an apt solution to bypass the issue of non-acceptance of negative numbers in 1494’s Europe.
This was Luca’s way of making things work, or what we Indians call Jugaad.
Uno Reverse at Work
Giving opposite tags meant that Luca was not actually subtracting one number from another. Rather, he used the other tag and created a new effect that would, in essence, cancel a part of the existing tag and the excess of the original tag / effect would equal the net result desired.
Let us understand this with an example. Say that Cash decreased from ₹9,000 to ₹6,000.
Through previous transactions, Cash must have first increased to ₹9,000 and hence, we first show ₹9,000 through the debit tag and to denote its decrease of ₹3,000, we use the credit tag.
Now, the use of both tags must satisfy debit = credits and hence, we have to find out the excess of debit or, the figure that the credit tag needs to become equal to the debit tag. And, what does ₹3,000 need to become ₹9,000? 6,000 more which, is also what we get by our normal route of subtracting ₹3,000 from ₹9,000.
Thus, our act of creating an imaginary ₹3,000 in the credit tag and then finding out ₹6,000 as the figure to make things equal is, in essence, the same as subtracting ₹3,000 from the present ₹9,000 worth of cash; both leave us with a final amount of ₹6,000.
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