Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
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Entry Bookkeeping but with the concept of DEB itself as taught, as I understand, by Economists based, as it is, on out of date mathematical philosophy -- if you will.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
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