The Origins of Double-Entry Bookkeeping

The idea behind double-entry bookkeeping is extremely simple: each transaction is recorded in two separate books, as a credit (earning) in one and a debit (expenditure) in the other. At the close of daily business, the sum of both should balance, that is, the assets and the liabilities should be equal. If earnings and returns exceed outgoings and expenditure then that firm has made a profit, otherwise a loss. The relationship between rational economic action and double-entry bookkeeping is absolutely indissoluble: through double-entry bookkeeping, an enterprise’s accounts are inextricably linked and tightly bound together. The moral and religious foundations of double-entry bookkeeping arose from a scrupulous preoccupation with sin on the part of the faithful medieval entrepreneur. The aim of this article is to explore how the double-entry bookkeeping methodology emerged from the moral milieus of the late Middle Ages; how scholastic moral dogma insinuated itself into commerce mirrored by sacramental confession.