Mathematical Formulation of Financial Statements

Mathematical Formulation of Financial Statements

by Ad Min -
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Our objective in this post is to express standard financial statements concisely using symbolic mathematical notation that substantially captures their numerical information content and the constraints being satisfied.

We use the incidence matrix of an accounting graph to describe an abstract underlying accounting system that follows double-entry bookkeeping principles and we derive from it the classification, aggregation and stock-flow machinery that reproduces the well-known balance sheet, income and cash flow statements.