Posted: 28 Oct 2008 Last revised: 8 May 2017

Ehsan H. Feroz

Accounting Area, Milgard School of Business, University of Washington Tacoma, USA; Vernon Zimmerman Center, University of Illinois Urbana-Champaign; U.S. Government Accountability Office; Department of Accounting, University of Minnesota Duluth

Date Written: October 23, 2008


I highlight the simplicity as well as the misleading aspects of the double-entry bookkeeping and the Generally Accepted Accounting Principles (GAAP), especially for those who might naively believe that accountants "always tell the truth and nothing but the truth." The implicit assumptions of the alignment of managerial incentives with those of stakeholders (notwithstanding the agency problems well documented by the exegesis), and the degrees of managerial discretion provided by both the U.S. GAAP and the emerging body of International Financial Reporting Standards (IFRS) are sufficiently large so that even a 'camel' can be described as a 'horse' with appropriate disclaimers.

Ever since Rev. Paciolli passed down the double-entry bookkeeping framework, the accounting profession has rarely seriously addressed the issue as to whether this simplistic framework is the best way to record some rather very complicated and sophisticated transactions such as the accounting for derivatives involving some rather speculative transactions. Occasional calls for revisiting the double entry bookkeeping by the late Abraham Briloff and Yuji Ijiri among others were greeted with a cold response. After all, there is little managerial incentive to change a recording device that allows so much hidden discretion for managers. Even worse, it leaves the naive investors thoroughly confused about the intricacies of elaborate managerial accruals and deferrals taught painstakingly in an accounting degree program. Of course, from the point of view of the proponents of the very efficient market hypothesis (EMH), market can appropriately discount for any flaws in the accounting recording or measuring device. However, the empirical evidence to date is at best inconclusive. This limerick hopes to stimulate some serious discussions about the utility of the double-entry book keeping framework in today's environment of sophisticated financial engineering and principles based fair value accounting.

Keywords: Double Entry Bookkeeping, GAAP, IFRS, SEC, Agency Theory, Cognition, Communication, Deception, Linguistics, Numbers, Art, Critical Pedagogy, Accounting History, History and Philosophy of Science, Financial Literacy

JEL Classification: M41

Suggested Citation

Feroz, Ehsan H., Accomptant (October 23, 2008). Critical Perspectives on Accounting, Vol. 7, p. 699, 1996. Available at SSRN:

Ehsan H. Feroz (Contact Author)

Accounting Area, Milgard School of Business, University of Washington Tacoma, USA ( email )

1900 Commerce Street, Campus Box 358420
Tacoma, WA 98402-3100
United States
(253) 692 4728 (Phone)
253 692 4523 (Fax)


Vernon Zimmerman Center, University of Illinois Urbana-Champaign ( email )

515 East Gregory Drive# 2307
Champaign, IL 61820
United States

U.S. Government Accountability Office ( email )

441 G Street NW
Washington, DC 20548-0001
United States

Department of Accounting, University of Minnesota Duluth ( email )

10 University Drive
137 SBE
Duluth, MN 55812
United States
218-726-6988 (Phone)
218-726-8510 (Fax)

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