The Accountancy Model assists the Accountancy Profession to model a firm's economic events. Economic events are observed and then processed through a highly defined (and many times complicated) algorithm. The basic model begins with the identity:
Assets = Liabilities + Owners' Equity
Each of Assets, Liabilities, and Owners' Equity expand to the many accounting elements, and each of the many accounting elements further expand to the many accounts. After a specific economic event is observed (or more specifically, after a transaction occurs), the appropriate accounting model is mathematically applied. The output from the model is a journal entry recording the adjustments needed in the appropriate accounts.
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