Triple Entry Accounting

Triple entry accounting - TEA with Pacio


 

Infographic text

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Double entry accounting


First codified by Pacioli in 1492, every accounting transaction involves two entries - a debit and a credit, The debits and credits must balance. Thus the terms “Trial Balance” and “Balance Sheet”.

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The balance check guards against mistakes. This simple yet profound idea has changed the world by allowed trade, industrialisation and capitalism to flourish.

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But it cannot prevent cheating, where the debits might equal the credits but be wrong, or changed later. Internal corporate fraud is estimated at $4 trillion annually. The term is “cooking the books”.

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Triple entry accounting


Adds a third ledger entry for transactions between entities. The debit of one is the credit of the other. Neither can then “cook the books” by recording something different internally, nor by changing it later, if the entries are held in a public immutable blockchain.

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This simple yet profound idea made possible by blockchain technology is the most important advance in accounting for 500 years. Fraud will be greatly reduced – by trillions of dollars – and auditing expense and hassle much reduced.

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Adds a third ledger entry for transactions between entities. The debit of one is the credit of the other. Neither can then “cook the books” by recording something different internally, nor by changing it later, if the entries are held in a public immutable blockchain.

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TEA projects


Request Network * PayPie * Balanc3 * Fizcal * bBiller * Ledgerium

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TEA challenges


Double entry works in isolation in the books of each entity. Triple entry requires both parties to use a common ledger. That means everybody needs to participate and cooperate.

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Fail to scale. We know of 7 TEA projects. Probably six of them will fail due to network effects or lack of them.

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Isolation. If TEA is an isolated blockchain and has no connection to the plethora of other existing and future business data sources, then it will fail.

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Paciosolution


Has a global digital identity, standardised semantic data and interoperable business documents approach that links TEA to other business blockchain and off chain data.

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Pacio’s standard binds all TEA apps to each other, allowing cross app, cross entity, and cross jurisdiction participation.

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Pacio’s application platform approach allows TEA app providers to profit from network effects in other enterprise fields, and from competitors, with all helping to build the network for the benefit of everyone, suppliers, businesses, and customers.