The father of accounting

Benedikt Kotruljević is a 15th-century merchant from Dubrovnik that revolutionised the accounting world with his guide on bookkeeping systems and financial reports. He is considered the inventor of double-entry accounting. 

His book was written in 1458, more than 30 years before Luca Pacioli published his book about the modern bookkeeping system and, according to historians, was the creator of accounting. 

So, what is the difference between single and double-entry accounting? Error detection! Benedikt’s methodology makes it easy to spot errors and ensures that they are transferred to other financial statements. In a single entry, there is no method for error correction or detection.

Benedikt’s work was controversial. Many merchants in his era didn’t want to see it published as they believed he was revealing trade secrets. 

Luckily, Benedikt got his rightful status and is today accepted as the father of accounting as we know it.

Kotruljević’s Biography

The Kotruljević family arrived from Kotor to Dubrovnik somewhere around 1330. The family was prominent and financially well-positioned in Dubrovnik’s society. Benedikt’s father was a merchant. His primary business was leasing salt pans in the region of Puglia, Italy, and trading salt around the territory of today’s Serbia and Bosnia & Herzegovina. 

He was a renowned diplomat with a lot of connections on the Italian peninsula. Benedict’s birth date is not known. He is believed to have been born in Dubrovnik somewhere between 1415 and 1417 and grew up there, where he finished primary school. 

Later he continued his education in Ferrara and studied law in Naples and Bologna, which he never completed. 

Upon his father’s death in 1436, he returned to Dubrovnik, where he took over his father’s business and real estate. He started working as a merchant and soon got married to Nikoleta Dobrić, with whom he had 11 children. He worked with members of his family, his uncle Ivan and brother Nikola in particular. 

Thanks to his father’s connections, he continued enjoying benefits in Dubrovnik, working closely with the Kingdom of Naples, Florence, Catalunya, Venice, Sicily, and North Africa. 

Starting in 1448, Benedikt lived between Naples and Dubrovnik as a commissioner for the Dubrovnik Republic in Naples. In 1453 he moved to Naples with his family permanently and lived there until his death in 1469. 

He was a prominent merchant that was given many titles by the Naples’ Court, the most powerful being the title of Great Judge (Italian: Giudice Delle Cause). He worked as the king’s advisor and representative of King Ferdinand. For eight years he was the chief of the mint of Neopolitan money in Aquila, Italy. 

About trade and the perfect merchant

During his life in Naples, Benedikt Kotruljević spent most of his time surrounded by humanists Lorenzo Valla, Bartolomeo Facio, and Flavio Biondo. Inspired by their work, he published four scripts on topics he was passionate about. Two of them, About choosing a wife (Latin: De uxore ducenda), and About the nature of flowers (Italian: Della natura dei fiori), are lost. 

About sailing (Italian: De navigatione) from 1464 is kept at Yale University. His most important work, written in 1458, About trade and the perfect merchant (Italian: Della mercatura et del mercante perfetto), is kept in the National Library in Valletta, Malta. 

Benedikt is considered one of the first economic writers, discussing the new capitalistic society that was forming in Europe at the time. Initially, he wrote it in Latin but translated it to Italian to allow the wider public to read it and understand its principles. 

He defined trade that, according to his words, creates wealth for society and individuals. He discussed the importance of a merchant’s skills and ways to gain wealth through hard work and ethics. 

He was against those that believed that loans and interest on them are capital generators. 

Benedikt took his teachings of how to become a perfect merchant as a mission, saying that creating one is harder than becoming a judge. He emphasised the importance of a proper trade, debt-paying, promissory notes, deposit, collateral, and a proper bookkeeping system. 

For the first time, he used the term partita doppia (English: double-entry bookkeeping). 

He believed double-entry bookkeeping to be an essential instrument in analysing businesses and keeping track of the general ledger.

His book was printed and published in 1573 by editor Frane Petrić. During editing, Frane favoured the humanist side of the work instead of the economic, thus pushing historians to initially believe that Luca Pacioli was the creator of the double-entry system. 

In 1994, the European Accounting Association (EAA) held a congress in Venice, dedicating it to Benedikt’s book About trade and the perfect merchant, confirming that he was indeed the first to describe the system. 

Benedikt Kotruljević finally got the recognition he deserved, and his book became a mandatory read for all entrepreneurs and economists trying to understand the principles of trade. He describes the ideal merchant that follows fair trade principles and strives toward a successful and happy life.