Q4: Is bookkeeping and double-entry accounting based on a business model? If so, why is it important we understand what this business model is?
Yes, bookkeeping and double=entry accounting is based on a business model – a way of looking at business.
The key thing to remember about double-entry accounting is that it is a system of recording transactions of a firm to ensure the relationship between the different elements of the business model that underpins accounting is kept intact. Bookkeeping is based on a model, or way of looking at business. It is a powerful way of looking at a firm’s economic and business realities. A deep understanding by us of this way of looking at business could transform the way we view business reality from a view based on commonly-held misconceptions about how business works to a view based on a deep understanding of the good ideas and concepts of accounting. These ideas pervade the way bookkeeping is carried out. These ideas were developed from a time way before computers, before the printing press, indeed when quills and paper were ‘hi-tech’.