My Report to Dr. Bill McCarthy on REA Progress

Last week I was invited to be a guest lecturer to Dr. William E. McCarthy’s Michigan State University graduate students. As noted in my textbook, Balancing Act: A Practical Approach to Business Event Based Insights, in 2002 “I took a day during my family vacation to visit my alma mater, Brigham Young University. I started by looking up an article a professor had introduced me … Continue reading My Report to Dr. Bill McCarthy on REA Progress

Historical Accounting’s View of Blockchain Ledgers

In the final segment of the Historical Accounting Series, today’s episode comments on what really is a ledger, and how they benefit us. All the major books of historically bookkeeping are still with us in our financial systems today, including the Day Book, the Journal and the Ledger. Blockchain does not perform all of these functions. It does not fully qualify and create positions like … Continue reading Historical Accounting’s View of Blockchain Ledgers

The Ledger: The Last Book of Bookkeeping

This week we examine the last book of historical bookkeeping, the Ledger, which presents the position as of some point in time. The first book of bookkeeping, the Day Book (today’s source systems) gives a running list of transactions with customers or vendors. The second book of bookkeeping, the Journal, turns those transactions into journal entries, reflecting through debits and credits the flow of things … Continue reading The Ledger: The Last Book of Bookkeeping

The Journal in Historical Accounting

This week’s episode examines the second book of historical bookkeeping, the Journal. The journal turns business transactions into debits and credits, reflecting the flow of money through the categories of accounting, Assets, Liabilities, Equtiy, which is composed of Revenue and Expeneses, over time. The journal is where accounting rules are applied, determination of when revenue is earned or unearned, claims are valid or should be … Continue reading The Journal in Historical Accounting

The Day Book in Historical Accounting

This week’s episode takes a deeper look at the Day Book, the first book defined in historic Bookkeeping, the original book of record for transactions. The Day Book today is called operational systems, which records transactions chronologically. Historically it was recorded as a narrative, recording who, what, where, when, how much, including currencies, terms, addresses, etc. Our systems today are much less narrative in nature, … Continue reading The Day Book in Historical Accounting

Spread of Bookkeeping

This week’s episode of Conversations with Kip discusses the spread of accounting knowledge throughout Europe, and the commonality of the books defined as part of bookkeeping. The knowledge spread was quite consistent; each textbook discussed three parts to bookkeeping: (1) The Day or Wastebook (2) The Journal (3) The Ledger The next episodes will discuss these in more detail. This is Episode 123 of Conversations with … Continue reading Spread of Bookkeeping

Pacioli’s Summary of Bookkeeping

This week’s video looks over Pacioli’s summary bookkeeping, and points out how complete the bookkeeping cycle is documented. Below is Jerry Cripps translated version the summary. The full translation can be found here.  This is Episode 122 of Conversations with Kip, the best financial system vlog there is. Entries in the Ledger “1. In the ledger, all debits must be entered in the left-hand column … Continue reading Pacioli’s Summary of Bookkeeping

Pacioli Trial Balance and Closing

This week’s video gives an overview of each chapter in Luca Pacioli’s seminal bookkeeping treatise, and focuses on the last steps of the accounting cycle. Pacioli covered many special topics of accounting, including partnership accounting, petty cash, year-end rollover, statement production, error correction and more. An interesting point is how short the description of financial reporting is. The trial balance is the only financial report … Continue reading Pacioli Trial Balance and Closing

Pacioli and Blockchain

This vlog episode connects Pacioli’s comments on reconciling multiple books to today’s interest in blockchain technologies. Pacioli, in his treatise on bookkeeping written in 1494, talks about transactions with various parties, including taxes to the local government, banking transactions, consignment of goods, and transactions with long distance salesman. He notes the importance of capturing data carefully for all transactions. This become more difficult with turn-over … Continue reading Pacioli and Blockchain

Pacioli and Meticulousness in Bookkeeping

The emphasis on being accurate in bookkeeping is evident in the first treatise about it, written in 1494 by Luca Pacioli. He reiterates in numerous places things that can make the books more accurate, cleaner, and neater. As just one example, Jeremy Cripps’s translation of Pacioli says: “The person who wishes to know how to keep a Ledger and Journal using a proper system of … Continue reading Pacioli and Meticulousness in Bookkeeping