Its very wrong to assume things. even very simple logic yet calculatable equations.
Generalisation or Rounding-up's doesn't conclude the fact that it is a concrete statment.
This is because some assumption of equations can work 1 way, but the equation will be inappropriate when it loops.
Here's an example:
A very traditional truth that 30days make up a month.
And each 12months form a year.
Hence, traditionally its said that 30days = 1 month
12 months = 1 year = 360days?
For Accounting purpose, the matching concept take into ASSUMPTION that revenue and expenses, asset, liability lifespends are distributed equally to 12months per year.
But are they really EQUALLY Distributed?
In the assumption that
1year = 12months of 30days ( which is already wrong)
By mathematical term,
1year = 365.25 days
If we were to apply consistency, It would become
1month = 1year/12 = 30.4375
30.4375 =/= 30
0.4375 days make a big difference.
0.4375days for 70years = 30.625days
which is an extra of a financial period
and flip ur calendar, there are months with 28, 31 days.
This proves Inconsistency, which finance majors fail to understand.
Literal facts and mathematical facts doesn't always match each other.
The understanding that improve accuracy and having a definite accuracy must be there.
People often fail to understand Inconsistency, as part of the nature.
0 thoughts:
Post a Comment