C&A Introduction

January 7, 2025

Computers and accountants.

Computers

In school, I learned that computers record data, memorise it, process it, and give it back. But a computer is a digital machine, meaning everything is ultimately stored with 1s & 0s. So during the retrieval process, a computer will have to shape data in a user friendly form. A computer stores this: “01001000 01100101 01101100 01101100 01101111 00100000 01110111 01101111 01110010 01101100 01100100” but displays it for you as “Hello world”. Computers separate content and presentation. And that is a deep technological leap. It means some things are now possible with a computer that are impossible without. Take example of a simple notepad program. You do not need to rewrite a text to change the appearance of it, because the text is stored as content and the type typeface is part of a presentation process. You just cannot do that on paper. It is not about speed or computing power, it is just right impossible. Separation of content and presentation is a fundamental aspect of those machines.\

Accountants

For the accountant, computers have brought immediate benefits. Numbers always balance, copy of journals entries into accounts is automatic and errorless. So we have been freed from serious headaches. Computers have eased and speeded what we use to do on paper. But have we taken full advantage of the techno-leap and are we doing what is not possible without a computer. Do we fully benefit from the separation of content and presentation when we use the software available ?
We say no. How? Accountants code and record data using accounts, cost centres and such dimensional aggregates which reflect the expected output. It requires difficult choices and complex arbitrages. We want to record data in a hidden layer (content), then present them in appropriate ways. This will enable us to structure our records as we see fit, before and then present them in ad-hoc ways (legal, GAAP compliant, tailored to business etc. )\

Double entry accounting is a representation.

Accounting is the activity of recording events done by accountants. Accountants record stuff pertinent to the business in scope (usually) using the double entry method. It is called journalizing, and it varies with culture and entities in scope. Our point here is that accounting should not be confused with data acquisition. It deals with human activities, and some aspects of the recorded data do not exist in the actual world. The output of double entry accounting derives from a representation. As a matter of facts, double entry accounting represent events as movements of value between “places of analysis” (accounts, cost centres, etc. …)\

Illustration : A very simple example: Accounting for a purchase.

Consider two entities exchanging goods (bones) against coins. Two actual flows made of coins and goods moving in opposite directions from one entity to the other. This is the real world, the scope for data acquisition, and the fact that it is a purchase is invisible in the observable reality, it only exists among humans. actual

Now lets account for the buyer. Coins are going out, goods are coming in. First we set the scope of the buyer by drawing a circle around him, (hence cutting the flows) scoping 1. Nothing exists outside the scope scoping 2.

Then we link the (semi) flows together in one flow of “value” from the origin of coins to the destination of goods. Within our scope, we now see a movement of value from cash to stores. Accounting

So what have we done ? We have identified the coins and the goods to the value of the coins (that is called capitalism!), then we have drawn a movement of that value from origin to destination, all within the buyer’s scope. This is what double entry accounting is all about. Surely there are rules for the graph/record to be valid, but this is a subject for later.

Conclusion

You would say, I see where you are heading: you wish for a layer of data acquisition and a motor to represent the data. And you would be wrong. We have a methodology to model the data, and we need both a database to record it and a presentation motor for display and reporting. A tool to graph the data model, possibly linked to the DB, would also be very nice to have.