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9 September, 2011 / Andrew Read

British Museum

Source: Andrew Read

Source: Andrew Read

I was recently visiting England for personal reasons and took the opportunity to tour the British Museum. They have numerous accounting-related exhibits in their money exhibit (room 68). Included in the collection are 5,000-year-old accounting source documents and records, and artwork depicting the social significance of accounting and money through the ages. My particular favourite, however, is a 10 trillion dollar banknote. Unfortunately it is from Zimbabwe and is not worth the paper on which it is printed.

26 May, 2011 / Andrew Read

Making sense of T-accounts

Along with most accounting students, I first met T-accounts in my first semester of accounting studies. They totally baffled me; not the recording of transactions, but the way they were balanced at the end of the reporting period. At the time, it made absolutely no sense. So I dealt with them the same way I dealt with other inexplicable elements of accounting: I memorised the process. Some years later, one of my lecturers explained the rationale behind T-accounts and, finally, it all made sense.

To refresh some shaky memories, a T-account provides a list of transactions as is presented below.

While this format is convenient for recording transactions, it is not that useful for extracting information: you cannot determine the balance of the account easily and it takes some effort to determine the chronological sequence of the transactions. These two limitations are overcome by the running balance format of ledger accounts (as is typically used for bank and credit card statements) but that format has not supplanted the T-account format.

The process of determining the balance of a T-account was, to me, the most baffling. It entailed totalling both sides; then in the side with the lower balance, writing the amount necessary to make both sides equal – this amount was called “carried down”. Both sides were again totalled to ensure they were equal – that is, in balance. At this stage both sides were ruled off, typically with a double line, and the “carried down” amount transferred to the opposite side and labelled “brought down.” The resulting layout is shown below.

The logic behind this process escaped me until a lecturer suggested that I record the transactions in Roman numerals rather than Arabic numerals. That revelation made the process easier to understand.

The reason we use Arabic rather than Roman numerals is that Arabic numerals make it much easier to perform arithmetic because they have columns for units, tens, hundreds, thousands, etc. Roman numerals do not. Compare the ease of doing the following identical subtractions:

The process is easier with the Arabic numerals. Eight from one won’t go; eight from eleven is three; carry the one. Six from zero won’t go, six from ten is four; carry the one. One from one is zero. The answer is forty-three.

The way this subtraction would be undertaken using Roman numerals is to start with the lower number and count-up until the higher number was reached. Each increment in the counting-up process would be recorded with tally-marks and, at the end, the tally-marks would be counted to get the solution. A cumbersome and time consuming process.

If you are keeping records using Roman numerals, then a format that minimises subtraction is desirable. T-accounts require one subtraction calculation per reporting period; running balance accounts require many.

The “carried down” amount is the result of the counting-up from the lower amount to the higher amount. Formatting the account this way makes sense it you are performing subtraction using Roman numerals.

So, the format of a T-account makes sense if you keep records using Roman numerals. But, we haven’t used Roman numerals for centuries, why haven’t we changed? The only reason that makes any sense to me is the same explanation of why we haven’t changed the way we keep time or record dates.

If you think about it, dividing the day into twenty-four units and then subdividing those units into sixty subunits is stupid when we use decimal based measures for nearly everything else (unless you are an American). It also ridiculous to have months of different lengths.

We haven’t changed because the old technology does the job and the costs of changing outweigh the benefits from that change. Another possible reason is that accountants are conservative and we don’t want to fully commit to these new-fangled Arabic numerals until they have been fully tested: another couple of centuries should be sufficient.

13 April, 2011 / Andrew Read

Patron Saint of Accountants

Source: Wikipedia

Source: Wikipedia

St Matthew the Evangelist, author of the first of the Gospels, is the patron saint of accountants.  He is also the patron saint of tax collectors, bookkeepers, stock brokers and bankers.

Matthew, also called Levi in the Gospel According to Mark, was a tax collector for the King of Judea (Herod) when Jesus called him to be one of his first Disciples.  Matthew remained with Jesus and was present for the Last Supper, the Resurrection and the Ascension.  In Leonardo da Vinci’s painting of the Last Supper, Matthew is depicted as third from the right.

St Matthew’s day is 21st September in the Roman Catholic Church.

St Matthew is also mentioned in Islamic texts as one of Jesus’ helpers.

Sources:  Wikipedia; Catholic Encyclopedia

6 April, 2011 / Andrew Read

Monty Python and Accounting

Source: Wikipedia

Source: Wikipedia

Monty Python frequently poked fun at the accounting profession.  The accounting jokes website has links to some of their work.  One possible reason for their targeting of the accounting profession is that John Cleese’s father wanted him to become an accountant.  He was to work for Grace, Derbyshire and Todd Chartered Accountants on Whiteladies Rd, Bristol.

For those with poor memories, John Cleese is the tallest python most famous for his portrayal of the Minister for Silly Walks and the disgruntled parrot owner at the pet shop.  His later work includes Basil Fawlty from Fawlty Towers, Archibald Leach in A Fish Called Wanda, and Nearly-headless Nick in the Harry Potter movies.

Source: Doyle, M., Jones, B., Pawlik, T., Shapiro, E., Timlett, B. & Winter, A. (Producers) & Jones, B., Parker, A. G., & Timlett, B. (Directors). (2009). Monty Python: Almost the truth [Telecast]. UK: Bill and Ben Productions and Eagle Rock Entertainment.

27 March, 2011 / Andrew Read


Bookkeeper and words derived from it (eg bookkeeping) are the only words in the English language with three consecutive double letters.

27 March, 2011 / Andrew Read

Stairway to double entry

Source: Wikipedia

Source: Wikipedia

Robert Plant, lead singer of Led Zeppelin, started adult life training to be an accountant.  Unfortunately, he did not have the dedication to stay with it and had to settle for being a rock and roll singer after he quit accounting.

Just think how we all could have been saved from all of those dreadful cover versions of Stairway to Heaven if he had remained an accountant.


26 March, 2011 / Andrew Read

Australia’s military leaders

Two of Australia’s most accomplished generals during the Second World War were accountants.

Major General Arthur Samuel ‘Tubby’ Allen, CB, CBE, DSO, VD commanded the 7th Division in the Middle East and at the beginning of the Kokoda campaign.  He was dismissed by US General Douglas MacArthur and Australian General Thomas Blamey after the 7th Division and militia units had repulsed the Japanese advance along the Kokoda trail.  Blamey and MacArthur criticised Allen for his slow progress but neither of them had visited the front at Kokoda and they had no idea about the difficulties posed by the rugged terrain.

Allen commanded the 16th Brigade during the early stages of the war in North Africa and during the Greek and Crete campaigns.  He was promoted to command the 7th Division for the Syrian campaign and he led the successful defeat of the Vichy French forces.

Allen also served with distinction during the First World War.

Major General George Alan Vasey, CB, CBE, DSO commanded the 7th Division towards the end of the Kokoda campaign, having replaced Tubby Allen.  He also served with distinction in the First World War and as commander of the 19th Brigade during the Greek and Crete campaigns.  Vasey was killed in a plane crash in 1945 while returning to active duty after a period of sick leave.


Source: AWM



Source:  AWM

Source: AWM