Debit, Credit Trebit. Trebit?

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During the Mesopotamian era, a fairly complex accounting of possessions, purchases and expenditures existed. This method was recorded in cuneiform on clay tablets. This was a single entry method of accounting, and is still valid today, although it is less secure than the Double Entry system formalized Fra. Luca Pacioli, in the middle ages.


The double entry system avoided the use of negative numbers, much to the benefit of clerical types who did not have the benefits of computers and calculators.

In 1989, Professor Yuji Ijiri began to advocate the use of a triple entry accounting system, with the additio of a new classification of entry, the Trebit.

Double Entry accounting was developed to satisfy the need for a presentation of historical data to account for the change in equity beyond the capabilities of the single entry system.

However, because the double entry system is a backward looking system that primarily exists inside a single entity, it does not look at the security or validity of the transactions, and requires an extensive system of validation, the external audit, to confirm the validity of its representations.

Could Enron have happened if they had been using a triple entry system of accounting? Click To Tweet
With the advent of block chain technology in 2006 by Satoshi Nakamoto, as shown in the proof of concept digital currency Bitcoin, the technology has been developed for simultaneous recording of transactions in multiple, or distributed, ledgers. A system that, while it as all other technology can be hacked, is so difficult to hack that it is improbable and provides an almost audit proof system of recording.

Now, I’ll have to admit I’m pretty old school and am having a hard time keeping up with the advances in technology, but if I try to relate the triple entry system of accounting to the audit trail of a double entry transaction, what I see is that the third entry is the actual transaction and is recorded in the transaction ledgers or journals of all parties to the transaction, at each step in the transaction, the the simultaneous recording of the transaction as the normal debits and credits of a financial reporting.

This is simplified, and probably way off the mark, but for an old codger who was brought up on a system where the left hand represents what you got and the right hand represents what you gave up for it, the only data that is missing is the transactional history.

And, the simultaneous recording of the transactional history, done with the security of the block chain and its hash, is the easiest concept for me to understand.

If you can simplify this, and explain where the accounting profession is going, and why all the big boys are setting up their own block chain systems, and joining block chain governing bodies, any easier than this, please add your comments below. Some of old fogeys might appreciate a bit of elucidation.

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