Warsono, Sony The Rationality of Rules of Debit and Credit (2015) fb:sony warsono

THE RATIONALITY OF RULES OF DEBIT AND CREDIT

Double-entry bookkeeping (DEB) and the rules of debit and credit (RDC) have been used in
practice and taught in academia for at least 500 years. In the journal Issues in Accounting
Education, certain scholars have debated whether RDC needs to be eliminated from
introductory accounting courses. The proponents argue that teaching RDC bears greater
costs than benefits and that the rules are not intuitive for most students. Conversely, the
opponents argue that RDC is fundamental knowledge in accounting and has been shown to
survive without many changes. The unfinished nature of the debate was partly due to the
absence of the objective rationality of RDC. This paper shows that DEB and RDC have a
close relation mathematically. Initially, this paper presents certain important facts regarding
double entry bookkeeping as great knowledge that should be respected by modern accounting
scholars. Furthermore, this paper presents the rationality of RDC. This rationality is based on
a mathematical perspective because RDC was documented in the book of mathematics and
written by a professor of mathematics. RDCs are applied to address the writings on the
reduction of monetary value.

Electronic copy available at: http://ssrn.com/abstract=2699053

Warsono, Sony The Rationality of Rules of Debit and Credit (2015) fb:sony warsono

1. Introduction

The Accounting Education Change Commission (1990) encouraged the accounting academic

community and other stakeholders to make changes to accounting education because accounting

programs fail to follow the development of the ever-changing profession consistently, dynamically, and

complexly. Furthermore, the Accounting Education Change Commission (1992) asserted that the first

course in accounting is important and potentially provides significant benefits for many individuals who

intend to pursue a career in accounting and who intend to enter the business, government, and other

organizations that require accounting information for decision making. The first course in accounting is

expected to provide fundamental knowledge to accounting students for upper-level course study and to

provide an appropriate understanding to non-accounting students regarding accounting functions in

business and other organizations. Since then, many initiatives and research studies have been conducted

that are directly or indirectly related to efforts to change the learning process in the first course in

accounting, including some of the following papers.

The Accounting Education Change Commission offers funding to improve accounting education. The

Accounting Education Change Commission provided funding of nearly $ 1 million for five projects in five

universities in 1990 (Williams and Sundem, 1990) and a total of $ 1.2 million for five projects in six

universities in 1991 (Williams and Sundem, 1991). DeMong, Lindgren, & Perry (1994) propose a matrix for

assessing student outcomes. In addition to the use of a variety of pedagogical tools, Rankine & Stice

(1994) recommend the use of readings from the popular press accompanied by the appropriate sequence

of questions in an introductory accounting course. Saudagaran (1996) redesigns the first course in

accounting in the curriculum and changes the course from Introductory Accounting to Introduction to

Accounting. Kern (2002) evaluates the use of hands-on conceptual models in an active learning

environment in introductory accounting classes. David, Maccracken, & Reckers (2003) integrate the use of

Electronic copy available at: http://ssrn.com/abstract=2699053

Warsono, Sony The Rationality of Rules of Debit and Credit (2015) fb:sony warsono

technology and business process analysis into the first courses on accounting. Rankin (2003) investigates

the effect of diversity on student academic performance of first-year undergraduate students, particularly on

accounting students. Springer & Borthick (2004) present the implementation of business simulation in

introductory accounting courses. Fowler (2006) empirically tests whether the use of simulation games as

part of active learning in the first course in accounting encourages a higher level of skills than the use of a

traditional lecture format. Fordham & Hayes (2009) test whether paper color has an effect on quiz scores in

accounting principle courses. Laing (2010) examines the use of mnemonic devices to improve learning

processes in elementary accounting courses. Duchac & Amoruso (2012) describe the data on institutional

characteristics in the first course in accounting. Warren & Young (2012) propose the design of Integrated

Accounting Principles considered as the best practice course. In his dissertation, Fisher (2013) measures

the effectiveness of graphical organizers in teaching introductory accounting courses. Recently, Chiang,

Nouri, & Samanta (2014) compared the use of the traditional approach to the use of a friendly approach in

an introductory accounting course. In conclusion, for approximately 20 years, there has been much

research focused on learning in the first course in accounting, including both pedagogic approaches and

methods of learning. The research is important because the first course in accounting is taken by a wide

variety of students.

The learning model in the first course in accounting that was used until the late 1980s is commonly

known as the traditional approach in contrast to the innovative approach (Saudagaran, 1996) or the

preparer approach in contrast to the user approach (Diller - Haas, 2004; Williams, 2011). The traditional

approach mainly discusses the application of rules of debit and credit (hereafter RDC) in recording

transactions (Chiang et al., 2014). This approach has been widely criticized. The perspective of

bookkeeping is narrow (Saudagaran, 1996) and it is a poor usage of time to simply memorize bookkeeping

procedures (Chiang et al., 2014). Warren & Young (2012, p. 248) state that the bookkeeping approach

"requires students, predisposed to think accounting is irrelevant to them, to learn the new language of
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debits and credits and to meet instructors on unfamiliar turf, likely in a 'land' the students hope to visit never

again".

Wanda A. Wallace (1997), as the editor of Issues in Accounting Education, raises the issue of the

position of debits and credits in accounting education. As a response, Pincus (1997a, p.576) states that the

focus on debit-credit as the essence of introductory accounting course has created a significant cost; "...the

focus on debits-credits in the introductory accounting course may repel some of our best prospects, ...we

give non-majors a misimpression about the role of accountants in society, and it also fosters the wrong

mindset for our majors to carry forward to other accounting courses and the workplace. Furthermore,

Pincus (1997a, p.579) argues that the focus on debits credits in introductory accounting courses did not

achieve the intended benefits: [s]tudents tend to memorize, rather than understand, debits-credits. They

do not retain the knowledge very long or transfer it very well to related topics in later courses. In this simple

statement, Pincus (1997a, p.575) clearly states that [t]eaching debits and credits in the introductory course

is NOT essential. In the same journal, Vangermeersch (1997a) requires accounting educators to engage in

deep thought before intending to eliminate debits and credits in elementary accounting courses.

Vangermeersch (1997a) reminds us that [a]ccounting taught by debits and credits has survived

momentous technological changes like the special journals of the late 1700s, the loose leaf ledgers of the

late 1800s, the bookkeeping machines of the 1920, and the computers of the 1950s. (p.582), and if

accounting studentsand indeed all business majorsdo not have a strongly infused knowledge of the

fundamentals of accounting, they have been ill-served by us. (p.583).

In her reply, Pincus (1997b, p.585) argues that ...the accumulating evidence to date does not

support the notion that it is crucial to begin an accounting education by focusing on debits and credits.

However, in his rebuttal, Vangermeersch (1997b, p.587) asserts that I have never seen anyone hurt by

being basically sound in accounting but have seen countless numbers ruined by not being basically sound

in accounting. Extending the academic debate between Pincus and Vangermeersch, Ingram (1998, p.
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413) argues that debits and credits are nearly exclusively beneficial in manual systems whose further

contributions decreased with the use of information technology because "[t] he computer translates the

debits and credits back into pluses and minuses ".

Certain empirical research seeks to compare the traditional (preparer) approach and the innovative

(user) approach, certain of these include the following four papers. Using the survey design for 33

accounting departments, Diller-Haas (2004) finds that 29% of the accounting departments apply a

"blended" approach rather than a "user" approach, and the remainder (71%) continue to apply the

traditional approach in the introductory accounting curriculum. Using 101 students in the experimental

design, Fowler (2006) compares the use of active learning to the use of the traditional approach using a

debit and credit application in introductory financial accounting courses. Fowler (2006) finds that the impact

of the use of active learning on the student's critical thinking and evaluation skills is no different from the

use of the traditional approach. Using an explanatory study, Palm & Bisman (2010) indicate that the first

accounting content, in general, remains traditional, with a focus on credit debit. Using a quasi-experimental

design, Chiang et al. (2014) examine the impact of teaching approaches in an introductory financial

accounting course on student performance in a subsequent finance course. The results indicate that the

impact of the teaching approaches (traditional approach vs. innovative approach) on the performance in the

finance course has no significant difference (Chiang et al. 2014).

The academic debate regarding debit and credit thus far is considered incomplete. Williams as a

former Chair and Executive Director of the Accounting Education Change Commission projects that "[n] o

doubt there will be continued debate about the role of teaching ''debits and credits'' in the first accounting

course." (Williams, 2011, p.775). This polemic has not been completed due to a lack of rationality of RDC.

Most modern scholars perceive RDC merely as rules, arbitrary or custom, although RDC has been

occurring for more than 500 years without undergoing any significant change.

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In the next section, this paper describes double-entry bookkeeping (DEB) as reliably beneficial

knowledge. The third section presents the objective rationality of the rules of debit and credit (RDC) that

follows the facts that occurred in the period, i.e., the use of money as a medium of exchange in business

transactions. The final section contains discussions and conclusions.

2. The great double-entry bookkeeping

Double-entry bookkeeping (DEB) is an example of great knowledge because it has proven reliable

for more than three generations (Chambers, 2000). Many scholars over the centuries praised the greatness

of DEB. Therefore, it is important to study the literature on DEB before discussing RDC.

As widely acknowledged, Luca Pacioli delivers DEB in his mathematics book entitled Summa de

Arithmetica, Geometria, Proportioni et Proportionalita (hereafter, Summa). Summas English title would be

Collected Knowledge of Arithmetic, Geometry, Proportions and Proportionality (Weis & Tinius, 1991). As

described by Hernandez-Esteve (1994) and Sangster, Stoner, & McCarthy (2007), Summa consists of two

volumes with the following details. The first volume contains nine chapters. Chapters 1 to 7, inclusive,

discuss arithmetic, Chapter 8 discusses algebra, and Chapter 9 discusses a variety of topics regarding the

application of mathematics in business. Chapter 9 consists of 12 treatises. DEB is in the eleventh treatise,

entitled Particularis De Computis et Scripturis. The second volume consists of one chapter, chapter 10,

which addresses geometry. The section of Particularis de Computis et Scripturis appears to be included for

the sake of completeness to recognize the importance of arithmetic principles in the application of

bookkeeping (Rabinowitz, 2009).

Pacioli was not an accountant or a bookkeeper. Pacioli was a mathematics professor who taught at

several universities (Hatfield, 1924), published a number of books, which were primarily in the pure

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mathematics field (Sangster et al., 2007) and in various fields of applied mathematics, including the military

(Weis & Tinius, 1991). The first time Summa was published, Luca Pacioli had been teaching mathematics

courses at several universities for more than 30 years (Sangster et al., 2007). Pacioli was awarded the title

of Father of Accounting by modern accounting scholars for his services.

It is possible that DEB had existed hundreds of years before it was published in Summa (Yamey,

1994; Rabinowitz, 2009). The majority of scholars believe that Pacioli contributes greatly to documenting

the state of DEB at that time for the following reasons. First, Pacioli presents practical business rules

without discussing the philosophy of DEB (Littleton, 1928). This presentation would indicate that DEB was

already an established discipline and that its use did not need to be justified. Second, the Summa title

indicates that the book is a collection of pre-existing knowledge. Third, DEB is thought to have been used

by the merchants of Venice several centuries before the publication of Summa (e.g., Kats, 1930; Yamey,

1947, de Roover, 1955; Edwards, 1960; Lee, 1973; Mann, 1994). These suggested reasons may have

motivated certain researchers to propose the origin of DEB (e.g., Martinelli, 1977; Mattessich, 1989; Aiken

& Lu, 1998; Zaid, 2000), which occasionally led to debates that are not easily resolved. For example,

Jacobsen (1964) argues that DEB derived from the accounting practices of the Inca in Peru. In response,

Forrester (1968) reports that the Inca had a moneyless economy. Lall Nigam (1986) claims that Bahi-khata

was an early forerunner of DEB development and that it was used in India hundreds of years before DEB

was used in Italy. In response, Nobes (1987) concludes that Lall Nigams' claims are supported solely by

anecdotal evidence.

Since the inception of DEB, many scholars have marveled at its efficacy and efficiency. Among them

are the following. Von Goethe (1795 [Ch. X, par. 13]) states that DEB is among the finest inventions of the

human mind; every prudent master of a house should introduce it into his economy. Cayley (1894, p. 5)

holds that DEB is in fact like Euclid theory of ratios an absolutely perfect one. Childs (1895, p. 77)

states that DEB is a beautiful system - a science in fact .... Hatfield (1924) suggests that the excellence of
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DEB is the main reason for viewing accounting as an academic discipline. Littleton (1928) notes that

accounting owes its modern status to the Middle Ages because modern accountants have not been able to

improve upon the original formulation of DEB. Weber, Schumpeter, and Sombart (in Carruthers &

Espeland, 1991) argue that DEB is an important instrument in the service of rationality and has played an

important role in the development of capitalism. Chambers states that DEB could accommodate anything

(1987, p.99) and is the source of modern accounting (2000, p.328). Yamey (1994, p.380) concludes that

the basic framework of double entry is the sole accounting practice to adapt and survive for more than 700

years: a tribute to its adaptability.

DEB is one of few principles that has remained unchanged for more than 500 years (Littleton, 1928;

Rabinowitz, 2009). DEB has been practiced for hundreds years and forms the foundation of modern

accounting (Littleton, 1928; Edwards, 1960). However, despite its success, DEB is considered to be a

mystery (Littleton, 1928; Yamey, 1947, 1994). Recently, Gleeson-White (2012, p. 8) stated ... the double-

entry bookkeeping is one of history's best-kept secrets and most important untold tales. Waymire (2012)

and Basu (2012) assert that DEB is a practice, the efficacy of which has not been satisfactorily explained.

At the conclusions end, Basu (2012, p.865) specifically requests accountants to answer the question Why

is the double-entry bookkeeping beautiful?

In conclusion, DEB is a legacy for accounting to be admired from generation to generation and

continuously applied until now. Unfortunately, thus far, the greatness of academic DEB remains a mystery.

3. The rationality of rules of debits and credits

In addition to containing DEB, Summa contains the rules of debit and credit (RDC). However, in

Summa, there is no explanation of the philosophy underlying RDC. Littleton (1928, p.136) quotes from the

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translation of Summa "....in the journal, per (by) was used to denote the debit and a (to) to indicate the

credit (p.26). The use of these last terms is very technical because the journal entry always takes the form:

by Cash to Capital, and Paciolo never attempts to clarify the underlying meaning of by or to. The

same technicality continues to persist .... The RDC contained in Summa remains valid today, although it

has lasted more than half a millennium.

Several scholars have studied RDC from a mathematical perspective. Peters and Emery (1978)

believe that at the time DEB was developed, mathematicians did not accept the concept of negative

numbers, which led to the idea of implementing the debit-credit mechanism. However, Scorgie (1989)

argues that Peters and Emerys claim is not supported by the evidence. Scorgie (1989) shows that the

negative numbers were known before the publication of Summa. By assuming there was a Pacioli Group

that operated solely with non-negative numbers, Ellerman (1985, 2014) uses an algebra model formulated

in the nineteenth century to clarify the treatment of DEB. However, there remains no elucidation of the

simple rational basis for the debit-credit mechanism that is accepted by accountants.

The lack of rationale for rules of debits and credits has had a significant effect. Most modern

accounting textbooks treat RDC as arbitrary (Anthony, Hawkins, & Merchant, 2007) rules of thumb

(Williams, Haka, & Bettner, 2007) or mere customs (Weygandt, Kimmel, & Kieso, 2011; Kieso, Weygandt,

& Warfield, 2011). Moreover, certain researchers claim RDC is simply a part of the vocabulary of

accounting (Wallace, 1997, p. 230), mere language (Pincus, 1997a, p. 579), or nothing more than

pluses and minuses (Ingram, 1998 p. 411). In turn, the study of RDC is considered excessively narrow and

procedural (Patten & Williams, 1990; Nelson, 1995); it requires students to memorize (Pincus, 1997a;

Ingram, 1998), poses a risk of misrepresentation to students regarding accounting (Pincus, 1997a; Diller-

Hass, 2004) and meets instructors on unfamiliar turf, likely in a land'' the students hope to visit never

again. (Warren & Young, 2012, p. 248).

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This paper uses the mathematical approach to propose the rationality of RDC. The approach is

appropriate because of certain arguments, as follows. First, DEB and RDC were documented in Summa as

a mathematics book compiled by a professor of mathematics. Second, scholars of several generations

conclude that DEB is the application of mathematics. Cayley (1894, p. 5), as a professor of pure

mathematics, states [t]he Principles of Book-keeping by Double Entry constitute a theory which is

mathematically by no means uninteresting .... Childs (1895, p.77) states that DEB is ...a science in fact,

based upon true mathematical principles.... Littleton (1927, p.140) notes that arithmetic is an antecedent of

double-entry bookkeeping ...since bookkeeping is a sequence of simple computations.... Williams (1978,

p.38) concludes that the power of mathematic is ...an essential ingredient for a complete system of double-

entry book-keeping. Weis & Tinius (1991, p. 95) go further, holding that ...the Venetian method - you call it

a double-entry - was an application of Arabic algebra. Ellerman (1985, p.226), in Mathematics Magazine,

states ...the double entry system is based on a well-known mathematical construction of undergraduate

algebra.... Third, much evidence suggests that reliable knowledge is typically grounded in mathematics,

such as the law of Pythagoras. Mathematics essentially explains the facts objectively.

Most of the accounting literature presents the basic accounting equation in the "Assets = Liabilities +

Equity", which consists of the left and right sides. The equation reflects the application of algebraic

equations. Furthermore, the literature states that 'debit' means left and that 'credit' means right;

bookkeeping entries are made in two sides, and debits are entered on the left side, with credits being

entered on the right side. Pacioli (in Littleton 1928 and in Peters & Emery 1979) used terminologies per

(debits) and a (credit) to refer to left and right positions. In turn, most modern accounting textbooks define

debits as the left side and credits as the right side (e.g., Anthony et al., 2007; Williams et al., 2007;

Weygandt et al., 2011; Kieso et al., 2011). Thus, the definitions of debits and credits, left and right, are

closely related to the accounting equation as an algebraic equation.

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RDC is technical. The rules are basically used to represent the increase of (addition) and decrease

(subtraction) of the assets, liabilities and equity elements in the basic accounting equation. However, it

would be incorrect to conclude that the terminology of debit always means an increase (additions or

pluses), or that the terminology of credit always means a decrease (subtraction or minuses). The rules for

debits and credits depend on the position of the elements in the accounting equation. For example, assets,

which are positioned on the left side of the equation, are recorded (in each case by a positive number) in

the debit (left) side when the assets increase and in the credit (right) side when they decrease. Similarly,

liabilities and equity, which are positioned on the right side of the equation, are recorded (in each case by a

positive number) in the credit (right) side when the liabilities and equity increase and in the debit (left) side

when they decrease.

It will be evident that an accurate balance could be constructed by making entries solely using the

symbols of addition/plus and subtraction/minus (Ingram, 1998). Therefore, why do accountants make

entries on two sides using the terminology of debit and credit? The basic function of accounting is to

provide financial information in which the financial measurement tool is always positive to someone; it can

never be negative. The absence of a negative value in monetary units is in accordance with the facts

contained in that period. Littleton (1927) and Edwards (1960) confirm that a monetary unit was one of the

factors encouraging the development of double-entry bookkeeping. Consequently, the use of negative

numbers to reflect the financial information is prohibited. Therefore, to record the decrease in monetary

value, the early initiator of DEB originated the idea of using two sides and moving what would be a negative

number on one side to the other side, where it is positive. Using this mechanism, a decrease in monetary

value can be represented by a positive number that, due to the meaning of the side in which it is placed,

carries with it the meaning of a decrease. This technique is essentially a mathematics procedure.

In essence, the debit and credit mechanism represents a consequence of the algebra equation

whose recording is reflected in the double entry system. To illustrate, here are examples of how
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approaching DEB from an algebra perspective underlies and establishes the rationality of the debit-credit

mechanism in the basic accounting equation.

Case A. Assume that Assets = 10, Liabilities = 4, and Equity = 6. Applying the basic accounting equation,

we obtain 10 = 4 + 6. Suppose that the net amount/balance of assets (10) is the difference between the

transactions valued at plus 25 and minus 15 (25 15). Now, accounting does not recognize the negative

number (here, -15). Therefore, to eliminate the negative number and, at the same time, explain it, the value

of minus 15 on the left side must be recorded on the right side with a positive number. Thus, the increase in

assets is recorded as a debit, whereas the decrease is recorded as a credit (see Figure 1).

FIGURE 1
The Mathematics of Numbers Debit/Left Side
Debit/Left Side Credit/Right Side

10 = 4 + 6

(+25) + (15)

Dr Cr.
25 15

The Rules of Debit and Credit for Assets

Dr. Assets Cr. =
+ -
increase decrease

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Case B. Assume that Assets = 10, Liabilities = 4, and Equity = 6. Applying the basic accounting equation,

we obtain 10 = 4 + 6. Suppose that the net amount/balance of liabilities (4) is the difference between

transactions valued at plus 18 and minus 14 (18 14). Now, accounting does not recognize the negative

number (here, -14). Therefore, to eliminate the negative number and, at the same time, explain it, the value

of minus 14 on the right side must be recorded on the left side with a positive number. Thus, the increase in

liabilities is recorded as a credit, whereas the decrease is recorded as a debit (see Figure 2).

FIGURE 2

The Mathematics of Number Credit/Right Side

Debit/Left Side Credit/Right Side

10 = 4 + 6

(+18) + (-14)

Dr. Cr.
14 18

The Rules of Debit and Credit for Liabilities

= Dr. Liabilities Cr.

- +
decrease increase

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Case C. Assume that Assets = 10, Liabilities = 4, and Equity = 6. Applying the basic accounting equation,

we obtain 10 = 4 + 6. Suppose that the net amount/balance of equity (6) is the difference between

transactions valued at plus 36 and minus 30 (36 30). Now, accounting does not recognize the negative

number (here, -30). Therefore, to eliminate the negative number and, at the same time, explain it, the value

of minus 30 on the right side must be recorded on the left side with a positive number. Thus, the increase in

equity is recorded as a credit, whereas the decrease in equity is recorded as a debit (see Figure 3).

FIGURE 3

The Mathematics of Number Credit/Right Side

Debit/Left Side Credit/Right Side

+
10 = 4 6

(+36) + (-30)

Dr. Cr.
30 36

The Rules of Debit and Credit for Equity

= Dr. Equity Cr.

- +
decrease increase

4. Discussion and conclusions

Chambers (2000) argues that reliable knowledge may occasionally be rudimentary knowledge

displayed through a set of rules, maxims, precepts, or work habits; this has occurred in accounting,

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particularly for double-entry bookkeeping and the rules of debit and credit. The rules of debit credit actually

are grounded in reliable knowledge, which unfortunately until now, were treated merely as arbitrary

customs. This paper presents an objective rationale of the rules of debit and credit. The basic function of

accounting is to present financial information using a monetary unit that does not recognize negative

numbers. To avoid the use of negative values, the initiator of the double-entry bookkeeping applies the

transfer mechanism from the left (debit) to the right (credit), and vice versa. This mechanism is an

application of mathematics.

It is true that the debit and credit rule is essentially mechanical. Is it relevant, then, that this debit and

credit rule be taught in classes of accounting principles? The rule remains relevant. First, the debit and

credit rule conveys a picture to the student that accounting is based on established knowledge, particularly

mathematics. Second, as with computer science with its binary digits (0 and 1) and the science of electricity

with its on and off, accounting is endowed with debits and credits as unique knowledge, which is used

solely in accounting. Third, debits and credits can be used to enhance the concreteness of the knowledge

of accounting; the study of debits and credits tangibilizes the workings of accounting. Tangibilizing the

accounting mechanism is important to help the student understand accounting topics related to keeping a

journal and posting, which are indeed at the heart of accounting as an academic discipline. Fourth,

because accounting students are expected to compile or construct information, not simply to use

information, they must have acquired basic knowledge of data processing as useful information

(Vangermeersch, 1997a). Fifth, knowledge of debits and credits encourages the student to think

systematically and logically and to develop the knowledge regarding accounting dynamics as a fast growing

science through the implementation of mathematical knowledge.

The rationality of the rules of debit and credit is expected to settle the debate regarding whether the

teaching of debit and credit should be eliminated from elementary accounting courses. Teaching of debit

and credit should be an instrument to convey to both accounting and non-accounting students that
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accounting is an academic field that is grounded in well-established knowledge. Interestingly, the rules of

debit and credit have been documented in academia long before the development of the airplane (the late

nineteenth century or early twentieth century), the presence of the phone (the nineteenth century), and the

emergence of electricity (eighteenth century) and before Isaac Newton documented the theory of gravity in

the seventeenth century.

The rationality of the rule of debits and credits can be used to answer certain of the following

important issues. First, the teaching of debit and credit should no longer force students to memorize the

rules and regulations because the rules can be explained in a logical and easy-to-understand manner. Prior

research to test the effectiveness of traditional approaches treats the rules of debit and credit as rules to be

memorized without providing the logical arguments underlying the rule. This treatment prevents the

students from optimally developing critical capabilities. With this treatment, the students cannot adequately

comprehend the topics of discussion in the introductory accounting courses, which, in turn, leads to low

student performance. An explanation of the logical arguments underlying the credit and debit rule is

expected to be easily understood and accepted by students without coercion.

Second, the pluses and minuses approach should not be used to replace the debit and credit

approach. In this case, the plus and minus approach is useful mainly when analyzing the transaction in

which the analysis uses the accounting equation. In other words, the plus and minus approach is the

general language of communication in the process of identifying the transaction. Furthermore, the credit

debit approach is important for introducing the formal mechanisms in accounting because accounting

discussion topics essentially are always concerned with the application of the rules of debit and credit. In

this case, the rules of debit and credit are the specific language in many accounting processes, including

the process of journaling and posting.

Third, the rationality of the rules of debit and credit can be used as the basis to re-evaluate which

accounting equation is more appropriate: the conventional equation (Assets = Liabilities + Equity +
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Revenues Expenses) or the fundamental equation (Assets + Expenses = Liabilities + Equity +

Revenues). Currently, many accounting textbooks use conventional equations in teaching introductory

accounting courses. These textbooks generally follow the provisions on applicable accounting standards.

For practicality, Ingram (1998) treats both equations equally; both can be used. Using the philosophy that

accounting does not recognize negative numbers because the monetary value is always positive, the

conventional equation should not be used. Furthermore, the use of conventional equations causes students

to treat RDC as things that must be memorized. The fundamental equation is more appropriate because of

the similarities in harmony with and not in violation of the prevailing philosophy in accounting. Furthermore,

the fundamental equation can explain that the rules of debit and credit that apply to the elements of assets

and expenses are the same because both are on the left side (debit) of the equation.

The rationality of the rules of debit and credit can be used to conduct a re-examination of the

effectiveness of the traditional approach. The rules of debits and credits in prior research are treated as

rote; this has led learners to feel alienated from accounting. Students do not enjoy the accounting learning

process, which, in turn, leads to non-optimal student performance. Future research needs to examine the

impact of traditional approaches and the innovative approaches as a whole (blended approach) on student

performance. Both traditional and innovative approaches are complementary, not interchangeable. Thus,

the learning approach in introductory accounting courses must always adopt innovative approaches while

continuing to learn, in detail, the fundamental knowledge that is usually studied in the traditional approach.

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Warsono, Sony The Rationality of Rules of Debit and Credit (2015) fb:sony warsono

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