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Date: 2019-07-16 Page is: DBtxt001.php list0300-Value-change-measuring-progress-1

Definitions for TrueValueMetrics
Value Change measuring Progress

There is socio-economic progress when the 'state' of the person, family or community improves. A big component of 'state' is quality of life which in turn is made up of many components.

The elemental entity for analysis of progress and performance is an 'economic activity'. An economic activity consumes resources and creates value. The net of these is the valuadd, and where there is positive valuadd, there is progress.

Most financial accounting is done at the level of an organization. Most economic data are aggregated for the nation, and then disaggregated to lower adminstrative areas and places.

In order for economic activity to be aggregated in a meaningful way, it would be necessary for ALL economic activities to have a functional value accountancy system in place. IN such circumstances it would be possible for the results to be aggregated to either the implementing organizations or to the most appropriate place. Because this is unlikely to be achieved, some alternative approach needs to be adopted.

There is a technique in double entry money profit accountancy that can be used. It used to be referred to as 'incomplete records' and is a way for the financial performance of an enterprise to be reported accurately without having to record in detail all of the transactions that have taken place in a reporting period.

This technique is possible because of the unique and powerful idea of 'double entry' bookkeeping and the associated idea of balance sheet and profit and loss or operating statement. In this framework the 'change in the balance sheet' is equal to the 'profit' reported in the operating statement.

Applying this same idea in the TrueValueMetrics' framework means that valuadd ... in other words, progress ... can be determined by comparison of the 'state' between the beginning and end of a period.



The text being discussed is available at


TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative.
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