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Date: 2018-10-16 Page is: DBtxt001.php L0700-CC-ACCTGforSTATE


CORE CONCEPTS
ACCOUNTING FOR STATE ... THE BALANCE SHEET
MONEY WEALTH / MONETIZED VALUE
Money / Profit growth / GDP growth / Stock Prices / Cost push inflation / Wages chasing prices

STATE (BOP)
The balance sheet at the beginning of the period (BOP) puts on the record the state of affairs at this particular moment in time.
In conventional financial accounting the state of various money accounts are tabulated and a balance sheet created.
The same conceptual framing may also be used for all the values associated with the socio-enviro-economic system with numbers representing the state of all of the capitals ... the Social Capitals, the Natural Capitals and the Economic Capitals, of which Financial Capital is one part.

STATE (EOP)
The balance sheet at the end of the period (EOP) puts on the record the state of affairs at this particular moment in time.
In conventional financial accounting the state of various money accounts are tabulated and a balance sheet created.
The same conceptual framing may also be used for all the values associated with the socio-enviro-economic system with numbers representing the state of all of the capitals ... the Social Capitals, the Natural Capitals and the Economic Capitals, of which Financial Capital is one part.

PROGRESS / CHANGE IN STATE
The progress in a period is the improvement in the balance sheet between the beginning of the period (BOP) and the end of the period (EOP).
In conventional financial accounting the change in the state of the money balance sheet is the same as the profit for the period. This is a very useful concept and helps to ensure that the accounting correctly reflects the underlying transactions.
TPB Note: My observation going back several decades is that the training for UK accountants differs from that of US accountants in that there is more emphasis given to balance sheet analysis in the UK while the US has more focus on the P&L account, and the related cash flow statements. In my own experience, I have uncovered serious accounting problems because of balaance sheet analysis which just could not be reconciled with the visible realities.
Because socio-enviro-economic analysis is very complex, using balance sheet changes enables major simplification without changing in any way the basic rigor of progress measurement.

For more on this: L0700-CC-FLOW-PROCESS-CHANGEinSTATE
Open L0700-CC-FLOW-PROCESS-CHANGEinSTATE



The text being discussed is available at


TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative.
It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right.
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