Contemporary Accounting Research Vol. 17 No. 3 2000
Inferring Transactions from Financial Statements*
Abstract
In this paper, we embed the double entry accounting structure in a simple belief revision (estimation) problem. We ask the following question: Presented with a set of financial statements (and priors), what is the reader's “best guess” of the underlying transactions that generated these statements? Two properties of accounting information facilitate a particularly simple closed form solution to this estimation problem. First, accounting information is the outcome of a linear aggregation process. Second, the aggregation rule is double entry.
- DOI
- 10.1506/l0lw-nx5l-4wur-9jkl
- Volume
- 17
- Issue
- 3
- Pages
- 366-385
- Language
- en
- Sources
- crossref openalex