TITLE:
Cashlet Theory: Discovering the Nature of Accounting
AUTHORS:
Ting-Kai Liu
KEYWORDS:
Cashlet Theory, Nature of Accounting, Graph Theory, Debit, Credit
JOURNAL NAME:
Open Journal of Accounting,
Vol.6 No.2,
April
28,
2017
ABSTRACT: Accounting
is the “language of business”, which records how our society works from the
monetary aspect. Just like mathematics and science, accounting is one of the
subjects that help people understand the world. However, accounting is not
explained in a way that can be easily understood even for very basic concepts
such as debit and credit. This article introduces a novel concept of cashlet
into accounting area enlightened by chemistry. Cashlet is defined as a basic
accounting unit with a value of negative one in the same way that electron is
in chemistry. By comparing accounting transaction with chemical reaction, the
author finds out that an accounting transaction is actually a process of
transferring cashlets from one account to another just in the same way of a
chemical redox reaction that transfers electrons from one chemical species to
another. The account that gives cashlets is credited, while the account that takes cashlets
is debited. Graphs are introduced to visualize the process. In cashlet theory,
credit always means positive or plus (+), while debit always means negative or
minus (-). Philosophically, when people give, they get credits; when people
take, they get debits. The same idea is true in accounting. This article discovers
that the nature of accounting is a process of moving cashlets between accounts and a process of
recombining accounts, which simplifies the accounting concepts and helps people
better understand the world through accounting.