Jurnal Umum
Accounting Errors and Errors of Accounting
ABSTRACT: Accounting should pay more attention to errors, as errors are essential for
the updating of beliefs. Accounting is an information system, and errors are the carriers
of information according to Bayes’ Theorem. Accountants are primarily concerned with
the mean value, but the variance of accounting numbers is equally important. Only
autocorrelation makes historical accounting relevant for decision purposes. Endogenous
errors of accounting are more common than acknowledged. First, the accounting
model is linear, whereas the world is nonlinear. Second, accounting is not the only
information channel, and accountants must consider the role of accounting when it
supplements other information sources. This commentary discusses the consequences
of endogenous errors. Errors are inherent to accounting, and accountants must address
them.
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