Abstract:

The external borrowing process starting with the Crimean War led the Ottoman Empire to declare bankruptcy in the second half of the 19th century. As a result of this process, the Ottoman Public Debt Administration (OPDA) was established, which represented the claims of the creditors on the Ottoman’s resources and managed the repayment of the debts. The Ottoman Public Debt Administration transferred its right to manage the tobacco revenues, one of the most important tax sources of the Empire, over to the Régie Company. The Régie Company holding the tobacco monopoly was the first profit-sharing company set up with foreign capital. Having been one of the pioneers of foreign direct investments, the Régie Company strengthened the Ottoman’s ties with foreign financial, industrial and commercial capital. Also, it was a different practice in terms of its organizational structure spreading all across the country, the wide range of its activities and the revenues it obtained. While the application of the double-entry bookkeeping method in Europe dated back to the 13th century, it started to be practiced in the Ottoman Empire subsequent to the governmental edict published in 1879. One of the main reasons for the late application of this method in the Ottoman Empire was that the private sector remained underdeveloped. Having been a profit-sharing company founded with foreign capital, the Régie Company was among the earliest examples of a company using the double-entry bookkeeping method. The fact that this industrial enterprise was established between the years 1879 and 1885, during which the Ottoman Empire focused on liberalization efforts, led to the application of the double-entry bookkeeping method. Moreover, as a result of the transition to the double-entry bookkeeping method (1879), it contributed to the modernization of the Turkish accounting system. In this study, the financial statements pertaining to the years 1884 and 1909 are analysed by dividing them into specific periods. As a result of this analysis, it can be concluded that balance sheets and income statements became more comprehensible and that that some significant progress was made regarding double-entry bookkeeping practices. The study reveals that the Turkish accounting system in the 20th century reached a modern level thanks to such practices adopted in the19th century

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