Our View on Double Entry Accounting

What Is Accounting?

Accounting, as the “-ing” suffix implies, is an activity—not just its final outputs like statements or reports. It begins with recording events, and only later do we transform those records into insights. (Is there a distinction between accountancy and accounting? Perhaps, but that’s a debate for another time.)

Unlike scientific data acquisition, accounting doesn’t merely capture raw data. Its records represent events as movements of value between analytical constructs: value containers (rather than just accounts or cost centers). This is the essence of double-entry accounting.

Accounting as a Graph

An accounting record can be visualized as an oriented multigraph, where nodes represent value containers, and edges represent the flow of value. These individual graphs are segments of a larger, interconnected graph that represents the entire entity being accounted for.

The main graph captures all raw data in its pure form, without prematurely enforcing professional frameworks (e.g., GAAP). These frameworks are applied later, during the presentation stage, when the data is adapted to comply with specific standards.

Implications for Software Design

If accounting is fundamentally about graphs, then accounting software should be built on a graph database. This is our belief.

Our Professional Methodology:

1. Graph the Entire Entity: Represent the organization’s entire value flows as a comprehensive, interconnected graph. It should encompass everything we will need later at the presentation stage. (Could a tool automate this?)
2. Use Segments of the Entity Graph as Templates for Records: These templates serve a dual purpose:
   • They mirror business processes.
   • They encompass all aspects of the data that will be useful for presentation.