## Abstract

The purpose of the study is to analyze the accounting equation and the relationship between assets

and claims on assets (liabilities plus stockholders’ equity), based on the dual concept of monetary units. The

method is rationalistic, analytical and deductive, focusing on the implications that the dual concept has for the

accounting equation. The analysis consists of the application of the identity and characteristic functions along

with a coordinate transformation, to show that the assets-claims on assets relationship involves a change in

assets value. The identity function represents the dual concept of monetary unit and the characteristic function

relates both sides of the equation linking accounts whose units are partially identical. A reformulation of the

accounting equation is made; the new equation has different number of terms on each side. Finally, a

coordinate transformation for the assets side terms is done. Results show that the accounting equation consists

of a series of addition functions, which take into account the dual concept of monetary units. A different

number of coordinate dimensions arises on each side of the final equation, and a coordinate transformation is

applied to have both sides of the equation with two dimensions. This transformation results in a change in the

value of assets

and claims on assets (liabilities plus stockholders’ equity), based on the dual concept of monetary units. The

method is rationalistic, analytical and deductive, focusing on the implications that the dual concept has for the

accounting equation. The analysis consists of the application of the identity and characteristic functions along

with a coordinate transformation, to show that the assets-claims on assets relationship involves a change in

assets value. The identity function represents the dual concept of monetary unit and the characteristic function

relates both sides of the equation linking accounts whose units are partially identical. A reformulation of the

accounting equation is made; the new equation has different number of terms on each side. Finally, a

coordinate transformation for the assets side terms is done. Results show that the accounting equation consists

of a series of addition functions, which take into account the dual concept of monetary units. A different

number of coordinate dimensions arises on each side of the final equation, and a coordinate transformation is

applied to have both sides of the equation with two dimensions. This transformation results in a change in the

value of assets

Original language | English |
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Pages (from-to) | 384-398 |

Number of pages | 8 |

Journal | WSEAS Transactions on Business and Economics |

Volume | 13 |

DOIs | |

State | Published - 2016 |