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My difficulty is not with your exposition of Double Entry Bookkeeping but with the concept of DEB itself as taught, as I understand, by Economists based, as it is, on out of date mathematical philosophy -- if you will.  

[Lyapunov] showed that a sufficient condition for local stability was that the real parts of the eigenvalues for [a Jacobean] matrix be negative.  It was a small step from this theorem to understanding that such an eigengvalue possessing a zero real part indicated a point where a system could shift from stability to instability, in short a bifurcation point.

Mathematics of Discontinuity

Thus the quantification of a firm using DEB is nothing more than a snapshot of the firm at a particular moment in time having unreliable predictive value over time.  

And the unpredictability stems directly from "the cash flow and production/consumption" since they are the dynamic mathematical parts of the DEB equation.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jul 19th, 2010 at 01:25:54 PM EST
[ Parent ]
Bingo. Which is why the above comment is a comment, rather than a Probably Incredibly Unreadable Modelling Thread. You need both the state functions and the dynamic equations to have a full model, and the state functions are the easy bit :-P

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 19th, 2010 at 01:56:35 PM EST
[ Parent ]
"Oh," he said, disappointed.  "You're no fun a'tall."

:-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jul 19th, 2010 at 02:35:46 PM EST
[ Parent ]
When was the last time you sat in an accounting class?

Diversity is the key to economic and political evolution.
by Cat on Mon Jul 19th, 2010 at 04:52:49 PM EST
[ Parent ]
April 2010, Principles of Accounting, illustrated
Dec 2007

Diversity is the key to economic and political evolution.
by Cat on Mon Jul 19th, 2010 at 07:03:53 PM EST
[ Parent ]
I see I have to get off my ass and write that Modeling diary.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Wed Jul 21st, 2010 at 01:16:33 PM EST
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