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Title: Structure of accounting theory / by A.C. Littleton.

Author: Littleton, A. C. (Ananias Charles), 1886-1974.
Publisher: [Urbana, Ill.] : American Accounting Association, 1953.

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## p. 189 (#201) ############################################

INDUCTIVELY DERIVED PRINCIPLES

189
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Dynamic Balances. By making each account a dual instead of a single category.
accounting is able to operate its system of classification (bookkeeping) as a
scheme of dynamic balances which will be modified by both positive and negative
changes.
This form of expression states first a means suitable to achieving the
end indicated after the separating dots (...) and then in careful phrase-
ology states an aim or objective or intention of accounting. Here are two
important ideas characteristic of accounting-ideas which have evolved
from trial and error usage. By a certain kind of linking of the two ideas
in one sentence, a further idea is made evident. For a fact of usage is
then set into a significant relationship with a conscious intention, that is,
into the relationship running between a desirable end and a suitable means
to that end. Perhaps this example may serve to indicate how two account-
ing ideas cast in the form of an accounting principle must include a third
idea, that of a useful, significant relationship. By producing, in effect, a
third idea out of two, a principle makes a similar contribution to that
made by an account, for there a debit total considered along with a
credit total produces a third element, an amount telling of net change.
BOOKKEEPING CONVENTIONS
There are a number of bookkeeping conventions that express basic facts
about accounting. Four of them will be considered in this section and six
in later pages.
1. Ledger accounts have a debit and a credit side (as considered above).
2. Ledger accounts integrate with each other in a unique manner.
3. Ledger accounts and other bookkeeping records reflect the individual char-
acteristics of the enterprise and the industry concerned.
4. A bookkeeping system makes a definite contribution to the office problem of
dealing with enterprise data efficiently.
It is an accounting convention, an established fact of usage, that ledger
accounts integrate closely with each other. This integration or interlocking
of accounts is one of the unique features of double-entry bookkeeping. It
makes use of the natural duality that exists within every business transac-
tion; it helps explain the usefulness of two-sided accounts. And, more
important, this development long ago produced that peculiar arrangement
(probably at first accidental) which puts the plus side of accounts for
assets and expenses on the left while placing the plus side of accounts for
liabilities, capital and incomes on the right.
Because integration not doubleness is the outstanding characteristic of