The Accounting Equation and Revisiting the Theory of Double Entry Bookkeeping | swarsono@ugm.ac.

id

THE ACCOUNTING EQUATION AND

REVISITING THE THEORY OF DOUBLE-
ENTRY BOOKKEEPING1

Sony Warsono (swarsono@ugm.ac.id)

Department of Accounting
Faculty of Economics and Business
Universitas Gadjah Mada – Yogyakarta Indonesia

Abstract

Paton’s theory of double-entry system (hereafter, “DES”) inspired the development

of current accounting. This paper uses a mathematical perspective to review Paton’s
and existing theory of DES called the law of property or assets. Using syntactic
language, this paper proposes another theory of DES, called the “law of funds.” The
paper contributes to the current literature by proposing the development of DES
theory from a mathematical perspective, as DES was originally written in
mathematical text and documented by a mathematics professor.

Keywords: Theory of double-entry system; Law of property or assets; Law of funds;

Mathematics; Syntactic language; Semantics language.

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This paper is part of the book titling “Accounting and Mathematics: Revisiting the Theory of Double Entry” (Warsono,
December 2017), especially in Chapter 1 (Paradox in Accounting) and Chapter 3 (The Existing Theory of Double-Entry
Bookkeeping: Revisited). The detail of the book is provided in the reference.
1

Electronic copy available at: https://ssrn.com/abstract=3067066

 The Accounting Equation and Revisiting the Theory of Double Entry Bookkeeping | swarsono@ugm.ac.id

1. Introduction

Deliberately attacking the ‘‘fundamental and frequently asked questions’’ in

accounting will require innovations in research outlooks and methods, as well as
training in the history of accounting thought. It is shameful that we still cannot
answer basic questions like ‘‘Why did anyone invent recordkeeping?’’ or ‘‘Why is
double-entry bookkeeping beautiful?’’ (Basu, 2012, p. 865)

Financial studies and accounting are highly related, as financial studies cover many academic

disciplines, including accounting. Sound accounting practices are essential for financial studies, as

accounting’s basic function is to present financial information. Further, accounting output primarily

provides input for financial studies; thus, accounting practices build trust in financial studies.

Unfortunately, accounting’s actual contribution is questionable at present.

Currently, several accounting academics have addressed its status as an academic discipline. To

advance accounting as an academic discipline, Sunder (2006) as a president of American Accounting

Association 2006-2007 asked accounting academia imagine the alternative world of accounting

because it will not change if we do not change, and it usually start from the imagination. Demski

(2007, p.156) states that “accounting is not today an academic discipline….” Moreover, Hopwood

(2007) has stated three times that in the 1960s and presently the accounting community includes

people who think that they know what accounting should be. Fellingham (2007, p.160) posited that

current accounting accepts other sciences more than it contributes to them, and stated that the

“location of accounting at the academy is problematic.” Basu (2008, p. 425) has also expressed high

concern for current accounting conditions, and argued that “accounting researchers increasingly

pursue very small and narrow questions that do not advance professional knowledge.” Ball (2008)

also posited that the accounting rules or standards underlying its development cannot fully embrace

existing practices, as these practices are not standardized. Kaplan (2011) argued that innovative

accounting research, which can relatively improve professional practice, is rarely produced today.

Accounting academia’s concern is caused by the absence of identified intellectual foundations in

accounting, although various efforts have been made to identify its fundamental issues. In 2001, the

Electronic copy available at: https://ssrn.com/abstract=3067066

 The Accounting Equation and Revisiting the Theory of Double Entry Bookkeeping | swarsono@ugm.ac.id

Graduate School of Industrial Administration at Carnegie Mellon University organized an

“Intellectual Foundations of Accounting” conference, the report from which (Demski et al., 2002)

was documented. At the 2007 annual meeting of the American Accounting Association, Basu (2008)

requested that six panelists (Ball, 2008; Bloomfield, 2008; Demski, 2008; Fukui, 2008; Huddart,

2008; Nagar, 2008) present their respective opinions on the fundamental question, “What is the most

important accounting issue that we believe we understand, but in fact we either do not, or have failed

to consider the issue in the depth it deserves?” Further, in the 2012 annual meeting of the American

Accounting Association, Basu (2013, p. 841) asked six panelists (Ball, 2013; Brown, 2013; Gao,

2013; Madsen, 2013; Young, 2013; Zimmerman, 2013) to write essays on “the most incorrect beliefs

of accounting experts.” However, efforts thus far to identify the intellectual foundations of accounting

are still considered as unsatisfactory.

As an academic discipline, accounting has a substantial and superior legacy: we call it double-

entry bookkeeping (hereafter “DEB”) or double-entry system (hereafter, “DES”). Since it was

academically documented in 1494 by Pacioli, DES has been practiced, and has not changed

significantly (Yamey, 1994). Many generations of scholars have expressed their regard for DES (von

Goethe, 1795; Cayley, 1894; Childs, 1895; Hatfield, 1924; Littleton, 1928; Yamey, 1947; Chambers,

1987; 2000).

In summary, DES has been perceived as a trust-building tool in business for some time. However,

accounting academics’ current actions are inconsistent with the DES. On the one hand, accounting

academia recognizes its significance, but on the other hand, academia also questions its relevance in

accounting education, standards-setting, and research. For example, first, an unfinished debate exists

in education regarding the importance of teaching the rules of debits and credits in introductory

accounting courses. Second, boards in standard settings, i.e Financial Accounting Standards Board

(hereafter, “FASB”) and International Accounting Standards Board (hereafter, “IASB”), have

broached the possibility of unbalanced accounting equations in the stating of financial positions

(FASB, 2010; IASB, 2010b). Third, regarding accounting research, current accounting academia is

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 The Accounting Equation and Revisiting the Theory of Double Entry Bookkeeping | swarsono@ugm.ac.id

more interested in developing accounting from a non-mathematical perspective than mathematically,

although DES is academically embedded in mathematics texts, and has been documented by

mathematics professors (Hatfield, 1924). Consequently, the inconsistent treatment of the DES raises

a “double-entry system paradox” (Kirkegaard, 1996)2, because DES is still considered a relatively

obscure concept (Yamey, 1947; Gleeson-White, 2012; Basu, 2012; Waymire, 2012).

Several accounting academics have become interested in developing the theory of DES.

Literature (Brief, 1982) specifically notes four writers in the nineteenth century who discussed the

theory of DES, although few accounting scholars were interested in substantively explaining DES in

the twentieth century (Williams, 1978). At least two papers have been published on DES theory in

the past century. First, William Andrew Paton (1917) published a paper entitled “Theory of the

Double-Entry System” in the Journal of Accountancy. Second, Karl Käfer (1966) wrote a monograph

entitled “Theory of Accounts in Double-Entry Bookkeeping.” This paper revisits Paton's theory of

DES with the consideration that Paton's theory of DES accommodates the previous accounting

theories, published in the form of journals, not textbooks, and considered that this theory

characterized the development of current accounting in education, standard-setting, and research.

However, Paton’s theory must be reviewed to address the following issue. First, Paton’s theory of

DES uses semantic language in explaining the accounting equation, and his theory of DES was

developed based on observation. Currently, accounting standard boards (FASB, 2010; IASB, 2010)

argue that basic accounting equations should not necessarily balance.

This paper contributes to the literature on intellectual accounting foundations, or specifically, the

theory of DES. Paton (1917) discussed the theory of DES, which further inspired accounting

developments in this modern era. Relatively speaking, literature on accounting theory is rarely

discussed in accounting. Subsequently, accounting theory courses are more likely to address

2
If, for a moment, one considers the credibility crisis of practical accounting, it would be quite impossible to dismiss the
following paradox: the conflict between the enthusiastic praise of the system’s (double-entry bookkeeping, author)
strength on the one hand, and on the other, the many financial failures in the real world. How can such a powerful
system, even when applied meticulously, still result in disasters? (Kirkegaard, 1996, p. 10).
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accounting standards considered representative of theory (Robinson, 1984), rather than accounting

theory itself. Further, Barthel (2014) concludes that accounting theory courses are not prioritized in

U.S. undergraduate programs. This paper reviews Paton's theory of DES, primarily as it relates to

arguments that explain the accounting equation. It is thus posited that both arguments developed using

semantic and practical languages. This paper proposes that the theory of DES developed using

syntactic language, which is the highest language in the development of theory.

This paper’s primary contribution is to remind accounting academics that DES, as an intellectual

foundation of accounting in early history, is strongly associated with mathematics, as DES was first

composed in a mathematics text, and was documented by a mathematics professor. Therefore, looking

at DEB theory from a mathematical perspective is a necessity. In this case the use of a mathematical

perspective helps to identify the limitations of existing theories and propositions while proposing

revised theory of DES. As a discipline, mathematics is the mother of knowledge so that the academic

discipline developed based on mathematics has the opportunity to develop unlimited. We are grateful

that accounting has a tremendous mathematical based heritage, although up to now not many

accounting experts pay enough attention to this.

1. Accounting Theory in Perspective

It is unfortunate that there is a widespread feeling among academic accountants that

the profession, as represented by its official bodies, is not receptive to theoretical
developments…. In a letter I received recently, a leading accounting theorist stated,
“Probably the most critical problem in that part of accounting concerned with
financial reporting is that those who are making the important decisions – for
example, the Accounting Principles Board – do not seem to be using any accounting
theory. Their analysis and their recommendations appear to be strictly ad hoc.”
(Wheeler, 1970, p. 9; Accounting Theory and Reseach in Perspective)

The Committee on Accounting Theory of Construction and Validation (hereafter “Committee”,

1971) refers to the works of Morris (1938) and Carnap (1942), among others, to mention three

language areas commonly used to develop theories or propositions: syntactics, semantics, and

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pragmatics. First, the Committee (1971) argues that a theory is said to be syntactic if it presents a

relationship between two signs. Although they do not necessarily contain empirical content, syntactic

or analytical propositions rely more on mathematical and logic-based approaches. Further,

Committee (1971, p.55) mentions that syntactic theories require commitment to rules or definitions,

as exemplified by the syntactic propositions “(a + b)2 = a2 + 2ab + b2” or “Fifteen is one-half of

thirty.” Moreover, the Committee (1971, p. 56) noted that syntactic or analytical propositions are

“either true (valid) or contradictory.”

Second, the Committee (1971) stated that the theory is semantic if it presents a relationship

between signs and objects or certain events, as semantic theories or purported “empirical” theories

rely on an observational approach. For example, “John is a bachelor” is a semantic proposition, which

can be tested regardless of whether the proposition is empirically true or false. The Committee argues

that semantic theory typically uses observable operational definitions, and noted that empirical

theories are “either true (conform to the observations) or false” (1971, p. 56).

Third, the Committee (1971) stated that a theory is pragmatic if it presents a relationship between

its sign and a user’s sign, as a pragmatic proposition can allow the same sign to be interpreted

differently by various users. While the Committee does not provide examples of pragmatic theories,

these are typically the result of agreements, customs, instructions, habits, or practical considerations.

Pragmatics language is commonly established for ease and great opportunity to experience dynamic

changes following the parties involved with the agreement made. Further, the Committee (1971)

noted that “Different users may interpret the same sign in different ways.”

Ideally, the language used to develop accounting theory is syntactic, or at least semantic, while

pragmatic language should be avoided. In summary, three basic concepts distinguish syntactic and

semantic languages: analytic and mathematic non-empirics versus empirics, logical versus real world,

and syntactical versus observational rules (Committee, 1971).

Regarding the sequence or level, it can be asserted that syntactic theory is the highest level in

theory development, followed by the semantic and pragmatic theories. It is noteworthy that theories

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developed based on higher levels would apply in a lower level, but not vice versa. Thus, if an

accounting theory is syntactic, then this theory is highly likely to apply as semantic and pragmatic

theories. Empirically, many syntactic theories have developed to be proven as robust, persistent, and

enduring. Newton’s gravitational theory, the Pythagorean theorem, and other theories of physics are

all based on mathematical sciences presented in the form of analytical or syntactic theories, and have

proven useful in various other scientific propositions.

However, a perception of mathematics varies in accounting academia. For example, the

Committee (1971) states “The disciplines of mathematics and logical proposition says nothing

whatsoever about the real world” (p. 54), “analytic propositions require a prior commitment to a set

of rules or definitions” (p. 55), and “Examples of the latter are logic and mathematics. These sciences

are composed exclusively of the analytic propositions and therefore do not depend upon empirical

findings for their truth value.” (p. 56). These statements indicate the perception in accounting

academia that mathematics and logic are based on the commitment to a set of rules or definitions,

which do not necessarily relate to the real world.

Mathematics is a fact-based science; in other words, the meaning of a set of rules and

commitments in mathematics is logically said to be entirely grounded in fact. Many theories written

in mathematics, both natural and social, can be robust, persistent, and enduring. For example, the

statement “15 is one half of 30” reflects the fact that if 30 apples are split into two groups of equal

sizes, then 15 apples are in each group. In social science, the determination of winners when voting

with a 50% cutoff also reflects the use of mathematical applications. Concisely, a sound theory should

essentially be presented mathematically (using syntactic language), as the academic discipline’s

objective is to understand both facts and reality. In turn, the theory is robust, persistent, enduring, and

has an unfathomable potential to develop.

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2. Paton’s Theory of Double-Entry System

It is apparent that these two classes of facts, property and equities, will always be
numerically equal, for they are merely different aspects of the same thing. We have
one class of objective things to deal with, namely, the property items. In one case we
are listing the actual property; in the other case we are looking at the same property,
but are noting certain ideal facts representing the legal relationships between this
property and certain individuals or interests – that is, we are representing now the
distribution of ownership or the claims against property or, more exactly, the equities
in property. And since we are using the same measuring unit, the dollar, in stating
both classes of facts, we have numerically equal totals. It is customary to denominate
one list of facts assets or resources and the other class liabilities, and no great harm
need result from this nomenclature. However, it might be urged that the term
liabilities has the connotation of debts or outside obligations, and this meaning clearly
does not apply to the proprietor’s equity. (Paton, 1917, p. 9 and 10)

Paton (1917) argues that DEB theory should focus on one common fact: property. Further, Paton

(1917) grouped property or assets into two important concepts: the property and the distribution of

its ownership, the claims against rights, or equities. As the measurements use the same monetary unit,

the two concepts are expressed in equations that are numerically equivalent. Thus, DEB theory can

be written in the form of an equation, as follows: Property = Equity. Paton (1917) asserts that the

balance sheet represents a DEB developed based on the facts contained in the business entity.

Paton’s theory of DEB has inspired the development of current accounting. Most accounting

textbooks and standards state that the accounting equation consists of two sides, where the left side

reflects the resources, and the right side indicates the claim to such resources.3 Paton’s theory of

DEB—which notes that resources must equal to the claims on them—tends to use semantic language,

3
The dollar totals on the two sides of the balance sheet are always equal because these two sides are two views of the
same business. The listing of assets shows us what things the business owns; the listing of liabilities and owners’ equity
tells us who supplied these resources to the business and how much each group supplied. Everything that a business
owns has been supplied to it either by creditors or by the owners. Therefore, the total claims of the creditors plus the
claims of the owners equal the total assets of the business. (Williams et al., 2005, p. 48)

Resources owned by a business are its assets…. The rights or claims to the assets are divided into two types: (1) the
rights of creditors and (2) the rights of owners. (Warren et al., 2014, p. 9)

Financial reporting should provide information about an enterprise’s economic resources, obligations, and owners’
equity. (FASB, 1978, par. 41)

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or definitions that refer to objects or real-world events that can be observed, namely in the form of

assets or resources. In other words, the signs, objects, or events in Paton’s DEB theory are assets;

thus, the theory can be called the “law of property or assets.” Further, Paton’s theory developed based

on semantic language written in the form of the accounting equation, which is characteristic of

syntactic language.

However, an anomaly currently appears in the standard setting. Accounting standard boards have

recently indicated a lack of awareness of the above accounting equation. The following are statements

from the Conceptual Framework for Financial Reporting, which is a product of a joint project between

the FASB and IASB (2010):

OB12. General purpose financial reports provide information about the financial
position of a reporting entity, which is information about the entity’s
economic resources and the claims against the reporting entity.

BC1.33 In discussing the financial position of an entity, the Exposure Draft referred
to economic resources and claims on them. The chapter uses the phrase
economic resources of the reporting entity and the claims against the reporting
entity (see paragraph OB12). The reason for the change is that, in many cases,
claims against an entity are not claims on specific resources. In addition,
many claims will be satisfied using resources that will result from future net
cash inflows. Thus, while all claims are claims against the entity, not all are
claims against the entity’s existing resources.

The FASB (2010) and IASB (2010) references the above OB12 and BC1.33 to explicitly state

that the accounting equation does not have to balance. Assume that A reflects resources, RE reflects

the reporting entity, L reflects liabilities, Eq reflects equity, and RE does not equal A (in this case,

RE > A). The basic accounting equation is thus written as “A < L + E” or “RE = L + E.” Further, the

statement notes “the Exposure Draft referred to economic resources and claims on them.” The chapter

uses the phrase “economic resources of the reporting entity and the claims against the reporting

entity,” which reflects the standard boards’ decreased concerned with the existence of DEB.

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Such standard board statements have substantial consequences. Not only do the standard boards

ignore DEB, which retains a balance between the left and right sides of the equation, but the standard

boards (regardless of their awareness of such) also defy universal laws, such as the laws of

mathematics, thus far always expressed in equilibrium. The standard boards do not provide a

sufficient explanation for this inequality, except for a brief statement that must still be discussed.

Regardless of whether their observations are true or false, the FASB and IASB identify the

existence of present phenomena to indicate that the entity’s value does not always equal the entity’s

assets. This phenomenon is particularly evident in stock prices and the book value of capital market

listed companies, as companies’ stock values tend to be higher than the book value of their assets-

generated accounting. This phenomenon has led to arguments associated with the development of

DEB theory (or the balance sheet), which ultimately pushed the standard boards to deny DEB.

Further, the FASB (2010) and IASB (2010) captured this phenomenon in the form of statements or

propositions that can be expressed as an accounting inequality, rather than an accounting equation.

This discourse occurs, among others, as DEB theory has thus far been developed using semantic

language, although it is written using syntactic language. This phenomenon is reinforced by its

treatment in accounting academia, which regards accounting more as a pure social science so as to

deny its mathematics, which involves the mastery of knowledge.

3. The Law of Funds

The task of accounting is to provide reliable knowledge. …. What was regarded as

reliable knowledge was not a body of 'generally accepted principles' of the kind that
so strongly influence accounting practice. It was knowledge of the underlying nature
of the physical and biological and social context of practice. (Chambers, Accounting
Education for the Twenty-first Century, 1987, p. 97)

One step that can be used to solve this issue involves proposing or revising existing DEB theory;

the proposed DEB theory should be developed based on syntactic language, rather than semantic

language. In this case, Wheeler (1970) recommends that theorists identify what is to be theorized;

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this must be a sign, and not an event or object. Therefore, we must recognize the basic functions of

accounting and the sign that could be accounted for.

Undoubtedly, most accounting academics argue that accounting is a system to process business

events as financial information. Thus, the primary focus of accounting is to provide something that

can be measured using monetary units. The “something” mentioned in this paper is funds, which

contrast assets as the former are signs that are abstract and flexible. Thus, we posit that proposed

theory of DEB should be called the “law of funds,” rather than the law of property or assets.

The law of funds should be developed based on two principles, which Paton (1917) also used in

the development of DEB theory. The first principle involves the theory itself, which must be

developed based on fact or reality, in that something is believed to exist, whether visible or invisible.

Signs can be recognized in many situations, but are not always easily identified. The second principle

states that this theory should focus on one fact or reality—in this case, the fund—which can then be

grouped into at least two dimensions.

As there is a component that can be expressed in monetary terms, we refer to the object of

analysis as “funds”. This study posits that the law of funds revolves around the uses of funds, which

must always equal the sources of funds. This law is a description of both reality and fact. Further,

these funds can be perceived as two groups: uses of funds and their sources. As an illustration, if an

entity receives funds derived from the owner of one million Rp (Indonesian rupiah) to represent the

source of funds, then the funds in the form of cash, as a representation of the use of funds, must also

total one million Rp. Thus, the law of funds fulfills two principles of theoretical development as used

by Paton (1917), as this law is based on fact or reality, and focuses on a single sign—funds—grouped

into two dimensions, namely, uses and sources.

Further, the law of funds is expressed algebraically using equations; the basic accounting

equation involves the use of funds (assets) on the left side, and the sources of funds (liabilities and

equity) on the right. Thus, the basic law of funds in accounting can be expressed algebraically as the

following equations:

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USES OF FUNDS = SOURCES OF FUNDS

ASSETS = LIABILITIES + EQUITY

The law of funds in this algebraic equation must always hold, just as Paton (1917) required a

balance of “Property = Equity.” Thus, the accounting records for each transaction must always

maintain that balance. If an imbalance exists, an error has certainly been made in recording. This

principle of balance also serves as a basic control in the accounting process (Kirkegaard, 1996).

An analysis of transactions always leads to at least two pairs of changes. If these changes occur

on the same side (e.g., liabilities and equity), then the changes are always oppositional (while the

addition is pairwise with subtraction). In contrast, if the changes occur on different sides (e.g., assets

and liabilities), then the changes are always the same (pairwise additions, or a reduction in pairs with

subtraction). This is basically done to maintain balanced accounting equations, to reflect the law of

funds. This system comprises fundamental knowledge in accounting, as a duality system has been

applied for at least 500 years, and will continue to be used in the future. Technically, the duality

system is realized through the application of the rules of debit credi (hereafter, “RDC”). Thus, the

RDC reflect the implementation of the double-entry bookkeeping system.

Unlike the development of the law of property or assets, which uses semantic language and

focuses on assets or resources as objects or events, the development of the law of funds uses syntactic

language that focuses on the fund as a sign. The “funds” terminology is more abstract and flexible

than assets; thus, it more appropriately reflects the sign. An asset is one form of funds that still has

value as its benefit. Other than assets, funds also consist of something that has had its value of benefits

consumed. Another difference in the existing theory of DEB connects assets and events, while the

law of funds links two opposite but complementary signs: the uses of funds and their sources.

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4. Concluding Remarks

So what is the prognosis? If we decide to aspire to academic credibility, can we

achieve or preserve it? Do we have scholarly ideas to offer to the rest of the
university? Actually, it may be that we do. And for one of them, return to the double
entry accounting system, which Hatfield so eloquently admires. Extolling its beauty
and elegance, he quotes Goethe, Cayley, Hamilton, and others. As they say in
physics: ‘‘Just because the math is elegant doesn’t necessarily mean the physics is
correct, but it usually does.’’ (Fellingham, Is Accounting an Academic Discipline?
2007, p. 161)

Accounting is an essential academic discipline for financial studies, and has a legacy of

knowledge in the form of double-entry bookkeeping (DEB) or double-entry system (DES), which has

been practiced for over 500 years and has been proven to be a trust-building tool in financial studies.

As it has been inappropriately studied, current accounting raises a paradox, in that accounting serves

to produce financial information but cannot detect and prevent economic and financial crises. This

failure occurs because accounting scholars thus far have not adequately recognized the substance or

theory of DEB.

One of DEB theories that inspires current accounting developments is the theory written by Paton

in 1917. Although written using mathematical equations, Paton also evokes pragmatic and semantic

languages in describing not only the rationality of the rules of debits and credits, but also the theory

or philosophy underlying the double-entry bookkeeping. The use of these two languages consequently

leads to an improper perception of accounting. Accounting is treated as a social science and developed

based on rules, and not as an academic discipline that bases itself on mathematics. This is because

DEB was originally embodied in mathematics texts, documented by a mathematics professor.

This paper proposes a new theory of DEB, called the “law of funds.” This differs from Paton’s

DEB theory, developed using semantic language, as the law of funds is based on syntactic language.

The theory of funds is abstract and flexible, but still stands to the fact that the use of funds always

equals their sources. Theory using syntactic language is commonly developed using mathematical

formulas. Therefore, this paper essentially uses a mathematical perspective in developing DEB theory

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and in proposing the rationality of the rules of debits and credits. This perspective is precisely in

harmony with the existence of DEB in the mathematics treatise, Summa book.

Paton (1917) has several times noted the words “equal(s)” or “equity,” indicating that he believes

DEB is a mathematical application. Specifically, Paton (1917) used a mathematical perspective in

developing DEB theory. However, current developments in accounting are based on regulations and

standards; the development of accounting from a regulatory perspective actually demonstrates

accounting’s failure in anticipating the problems and business challenges inherent to this modern era.

Therefore, this paper recommends that accounting academia develop accounting from a mathematical

perspective. Applying this perspective has become a challenge not easily solved by the present

accounting academia. This is not because mathematical knowledge is insufficient, but rather, because

our mindsets are less concerned with mathematical exaggeration.

In this case, accounting academia must realize that computers are extraordinarily successful
because they are based on mathematics. The first computers developed in the 1940s primarily served
to calculate mathematical equations. Using four binary digits, early computers were particularly
useful for census counting, and hence were called computers. The next development, the computer
has evolved to the present day into information technology, which uses eight binary digits to produce
various types of output, both calculations as well as non-computing images, sounds, and other
functions. The presentation of non-computing outputs still relies on the science of mathematics,
namely binary digits. In the processing, computers combine two main functions, namely processing
functions and control functions, called central processing unit (CPU), and those two main functions
rely on mathematics to do the jobs. Types of controls, such as parity bits, self-check digits, barcodes,
random access methods, and encryption are all grounded in mathematics. By combining the
processing and controlling functions, the risk of error can be avoided. Interestingly, the technique of
combination these two functions have been done in DEB and RDC. Accounting uses RDC as a
processing as well as controlling the recording performed.

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