The Dual Aspects of Accounting Transactions and Asset Value Change in the Accounting Equation

Abstract: The purpose of the study is to analyze the accounting equation and the relation between assets and claims on the assets (liabilities plus stockholders’ equity), based on the dual aspects of accounting transactions. The methodology is rationalistic and analytical. The analysis consists of the application of the identity and characteristic functions, as well as a coordinate transformation. Results show that the accounting equation does not consist in a single addition, what would lead to inequality, but a series of addition functions when taking into account the dual aspects of accounting transactions. Due to the different number of summation dimensions on each side of the final equation, a coordinate transformation is applied resulting in a change in the value of assets; this value is not the same as that of the initial accounting equation.