Algebraic Models for Accounting Systems
Notes from (Nehmer and Robinson 1997).
Approaches to Accounting Theory
Algebraic concepts employed
- Balance Vectors
- A balance vector is a column vector or column matrix the sum of whose entries equals zero.
- Balance vectors are able to represent the state of an accounting system at any instant.
- They are also capable of encoding the transactions that are applied to the system.
- Digraph
- The vertices represent accounts and the edges indicate where there are flows of value within the system. Thus a digraph gives a picture of how value can flow around an accounting system.
- Automaton
- The applicability to accounting is clear: the states of the accounting system are the balance vectors, the inputs are the transactions and the outputs are the new balance vectors.
- Monoid