Double entry bookkeeping: Its philosophical and mathematical underpinnings

Abstract

This paper explores double entry bookkeeping as a theoretical and practical framework for the accounting discipline. Three foundational theoretical underpinnings for double entry bookkeeping are provided which constitute scientific and philosophical justification for the practice. These underpinnings consist of two philosophical stances and one mathematical position. In regard to the two philosophical stances, double entry bookkeeping is considered to be based on a figurative language perspective as well as a causality perspective. Regarding the mathematical position, the paper argues that double entry bookkeeping is grounded in an algebraic perspective specifically Pacioli group. The paper, hence, contributes to the understanding of double entry bookkeeping. The main contribution of this paper is to advance analysis of double entry bookkeeping while also subjecting this framework, which is widely applied, to critical review. Double entry bookkeeping becomes more applicable as the organisational complexity increases. This is why the double entry bookkeeping’s application at the micro-accounting level is minimal, while at the macro-accounting level its application is wide. The paper contributes to the literature on accounting theory by demonstrating that double entry bookkeeping is more than a technique by showing that it is theoretically grounded on a solid philosophical and mathematical foundation for the purpose of constructing and communicating economic reality.

Keywords:  Double entry bookkeeping (DEB), micro-accounting, macro-accounting, causality, figurative language, mathematical modelling, Pacioli group.