Accounting Theory

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

William B. Ryan wrote:

> It is our contention that the system of mass
> production free enterprise is impossible without the
> method of double entry or something better that can
> be used by ordinary businessmen, and it couldn't
> exist without credit, which is part and parcel of the
> same thing (meaning accounting).  It is marvelous
> technology.
>
> The development of double entry in the twelfth
> century was therefore a necessary precursor to the
> Industrial Revolution, as was Newton's invention of
> the fluxional calculus that enabled the design and
> construction of the machines of mass production.
> From the twelfth century on most transactions became
> to be conducted in market derived creditary
> instruments, such a bills of exchange and tallies
> rather than the king's "money."  The problem of final
> settlement in a growing economy was solved with the
> development of fractional reserve banking in the
> seventeenth century, which allowed reserves in the
> king's money to become a smaller and smaller
> percentage of transactions.  Now, in the twenty-first
> century, the king's money has become dispensed with
> entirely (except in systems of central planning where
> they are an instrument of that planning).  It is
> however not a perfect system without flaws.  It is
> those flaws which social credit attempts to address.

Perhaps some of the flaws of the current system will be addressed
by a new system of accounting as described in the paper below.

_A New Two-Dimensional Double-Entry Bookkeeping System
and Three-Dimensional Accounting_

Paper can be download here:
http://www3.bus.osaka-cu.ac.jp/apira98/archives/pdfs/72.pdf


Yong-Ha Hyon, Ph.D., CPA
and
Sae-Woon Park, Ph.D.

School of Economics and Management

Chang-Won National University
Chang-Won, Korea 641-773
Tel: 82-551-79-7386; FAX: 82-551-66-2500
Email: yhhyon@xxxxxxxxxxxxxxxxxxxx

---begin quote----
"Many thinkers from the orient have indeed displayed their contention that
the duality of double-entry bookkeeping is a derivative of the oriental
philosophy of "Yin" and "Yang", according to Yun(1984). It seems without
saying that while both single-entry and double-entry bookkeeping can account
for transactions occurred for a period, given the beginning and ending of a
period, the two bookkeeping systems perhaps have two drastically different
philosophical orientations. Besides the difference in forms and
philosophical orientations between single-entry and double-entry
bookkeeping, the two systems truly distinguish themselves in their
respective utilities. Single-entry bookkeeping is an individual accounts
oriented system, and the double-entry bookkeeping is an aggregation oriented
system to account for and audit all past transactions. Here one can consider
utility another set of criteria to test the "perfectness hypothesis."
Single-entry bookkeeping system as well as double-entry bookkeeping must
have been perfect for their respective time and place. As it can be well
articulated in the literature of history of accounting thought, double-entry
bookkeeping was not necessary in the single-entry era, as the same can be
said of a three dimensional accounting (or a triple-entry bookkeeping for
that matter) in the time of development of double-entry bookkeeping. Just
think of the differences in the tax bases in the ancient and modern world.
In the ancient world tax was collected on individual accounts basis (i.e.,
so many number of lambs, so many bushels of rice, etc.) whereas tax is
collected based on an aggregate earnings number in the modern world. Is then
double-entry bookkeeping perfect for the centuries ahead of us?"
---end quote---

Harry