The Inequality of the Accounting Equation and Changes in Assets from the Perspective of Axiomatic Set Theory and Mathematical Analysis

• In Event: Developing Research in Financial Accounting and Auditing

Abstract

The purpose of the study is to analyze whether the accounting equation holds under the use of axiomatic set theory combined with a mathematical analysis of the relations between assets and liabilities plus stockholders’ equity. The methodology is deductive, objective, rationalistic, and analytical. The analysis involved an application of axiomatic set theory, with mathematical functions, and a linear projection between dimensional systems. The results show that the accounting equation is an inequality and a series of summation functions are needed to add up all the capital on the asset side of the equation. Besides, a reduction in the dimensions of the functions leads to a change in the value of company assets.

Author

• Fernando Juarez, Universidad del Rosario