Assets Value Change in the Accounting Equation

Research output: Contribution to journalResearch Articlepeer-review


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
Original languageEnglish
Pages (from-to)384-398
Number of pages8
JournalWSEAS Transactions on Business and Economics
StatePublished - 2016


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