Part1, Considerations

Computers and Accounting

Computers

Computers record, store, process, and return data. At their core, they are digital machines: everything reduces to 1s and 0s. When we retrieve information, the system turns those bits into something readable. For example, the sequence “01001000 01100101 01101100 01101100 01101111 00100000 01110111 01101111 01110010 01101100 01100100” becomes the text “Hello world.”

What matters most is that computers separate content from presentation. This is not a side effect but part of their design. In a notepad program, the words are stored as plain text; font or layout choices belong to presentation. You can change the look without touching the content. On paper, the two are fused: to alter the style, you must rewrite everything.

The essential point is that computers, by their very design, separate content from presentation.

Accounting

Accounting is the activity of recording events. Accountants record what they consider relevant in a given context, usually by means of double entry accounting. This journalising method varies with culture and with the scope of entities involved.

Importantly, accounting is distinct from data acquisition in the scientific sense. A thermometer, for example, captures temperatures directly from the physical world. Accounting, by contrast, deals with human activities. Its categories do not exist in nature but in human conventions. Double entry accounting does not simply collect facts: it produces a representation.

To illustrate, consider a purchase.

Two entities exchange goods (bones) for coins. Two flows take place: coins move one way, goods the other:

This is the physical world: a place for data acquisition. Yet the notion of “purchase” is not visible here. It exists only as a human concept.

Now let us account for this exchange from the buyer’s perspective. Coins go out, goods come in. First, we define the buyer’s scope by drawing a circle around him, thereby cutting the flows:

Nothing outside this scope is considered:

Next, we link the two partial flows into one movement of value, running from the origin of coins to the destination of goods. Within the buyer’s scope, we now see a transfer of value from cash to stores

What has happened? We identified both coins and goods with the value of the coins, and then traced that value as it moved from one place of analysis to another.

That—representing events as movements of value between places of analysis such as accounts or cost centres—is the essence of double entry accounting.

Computers and accounting

For accountants, computers have brought immediate benefits. Entries always balance, and the posting of journal entries into accounts is automatic and reliable. Many of the tedious errors of manual bookkeeping have simply disappeared. Computers have made what we once did on paper quicker and easier.

But have we truly taken advantage of the deeper technological leap? In particular, do we make full use of the separation between content and presentation when we use accounting software?

The answer is no. Accountants still code and record data directly in terms of accounts, cost centres, and other predefined categories that already anticipate the desired output. These choices—whether in designing a chart of accounts or setting up predefined transactions—impose constraints and compromises from the start. Yet nothing prevents us from first recording transactions in a content layer designed to capture every aspect deemed relevant, freely and without loss. Such a layer would preserve the richness of events, while presentation could then be generated as required.

To embrace this approach would be to recognise that computers are not merely faster ledgers. They allow us to rethink accounting itself: to separate content from presentation, to record more fully, and to report more flexibly.

Until that shift is made, accounting remains bound by habits of paper, rather than the possibilities of the machine.

Conclusion

One might think the proposal is simply to add a layer of data acquisition and a mechanism to represent the data. That would be a misunderstanding. Accounting is not data acquisition but a system of representation, and computers, by design, separate content from presentation. Taken together, these two insights, point to a new possibility: a methodology to model and represent the data can be developed. Beyond that, a database to store it and a presentation engine for display and reporting are natural extensions. A graphical tool to design and maintain the data model—linked directly to the database—would also add great value.