Cashlet Theory: Discovering the Nature of Accounting

Accounting is the “language of business”, which records how our society works from the monetary aspect. Just like mathematics and science, accounting is one of the subjects that help people understand the world. However, accounting is not explained in a way that can be easily understood even for very basic concepts such as debit and credit. This article introduces a novel concept of cashlet into accounting area enlightened by chemistry. Cashlet is defined as a basic accounting unit with a value of negative one in the same way that electron is in chemistry. By comparing accounting transaction with chemical reaction, the author finds out that an accounting transaction is actually a process of transferring cashlets from one account to another just in the same way of a chemical redox reaction that transfers electrons from one chemical species to another. The account that gives cashlets is credited, while the account that takes cashlets is debited. Graphs are introduced to visualize the process. In cashlet theory, credit always means positive or plus (+), while debit always means negative or minus (-). Philosophically, when people give, they get credits; when people take, they get debits. The same idea is true in accounting. This article discovers that the nature of accounting is a process of moving cashlets between accounts and a process of recombining accounts, which simplifies the accounting concepts and helps people better understand the world through accounting.