Analogy 1 : Distinct Entity, Wealth Maximization, Financial Period, Going Concern, Agency Conflict, Accrual Accounting and the Accounting Equation
A company, it's owners and employees may be compared with our body, soul and faculties. Just as the company is distinct from its owners, so is our body separate from our soul. As employees should work for the maximization of wealth of its owner's : so should our faculties for the strengthening of our soul. As companies grow and acquire larger companies so does our soul's entitlement to better bodies, : provided that the faculties have not succumbed to desires in the time period of life. The latter is known as Agency Conflict in finance. Both follow the concept of accrual accounting, going concern and a financial period. While a company is presumed to continue forever, we continue for 8400000 life spans .Outstanding in companies are reflected in other financial periods, similar to the strengths and weaknesses which a body is born with in different life spans. Another foundation called the accounting equation states that corporate assets always equal the sum of the owners’ equity and other liabilities. Put in an equation form;
Assets = Owners Capital + Other Liabilities
The concept finds mention in the Indian scriptures describing 14 tangible and intangible assets (Indriyan) possessed by the human body and its 5 liabilities. The tangible assets have been divided into two types , the first referred to as assets which help us work (mouth, hands, reproductive organ, kidney and legs) and the second which help the human body attain knowledge (eyes, ears, nose, tongue and skin).The intangible constitute the human mind, intelligence, emotions and pride. The 5 liabilities mentioned are lust, anger, greed, affection and ego. Put in a spiritual equation form;
Assets = Soul Strength + Other Liabilities.
Just as revenue adds to the owners equity and expenses reduce the same; our souls strength increases and decreases by sacrificial and selfish actions (karma) respectively. A sacrificial action shall increase the soul strength with a corresponding decrease in any of the 5 liabilities or an increase in any of the 14 assets
Analogy 2 : Accounting Equation
Continuing from the above analogy I shall deal with another foundation called the accounting equation which states that corporate assets always equal the sum of the owners’ equity and other liabilities. Put in an equation form; Assets= Owners Capital + Other Liabilities The concept finds mention in the Indian scriptures describing 14 tangible and intangible assets (Indriyan) possessed by the human body and 5 liabilities. The tangible assets have been divided into two types , the first referred to as assets which help us work (mouth, hands, reproductive organ, kidney and legs) and the second which help the human body attain knowledge (eyes, ears, nose, tongue and skin).The intangible constitute the human mind, intelligence, emotions and pride. The 5 liabilities mentioned are lust, anger, greed, affection and ego. Put in a spiritual equation form;
Assets = Soul Strength + Other Liabilities.
Just as revenue adds to the owners equity and expenses reduce the same; our souls strength increases and decreases by sacrificial and selfish actions (karma) respectively. A sacrificial action shall increase the soul strength with a corresponding decrease in any of the 5 liabilities or an increase in any of the 14 assets