I wonder, what would be a real world example of the two-entities double entry you called Novation? Here the Payor for granted promises to pay for the payee. That is the Payor would for granted increase his payables for the account of the Payee payables. Or is it just a building block for the quadruple entries that are real world deals?
《because banking transactions almost always use borrowed funds, assets and liabilities do balance, and so it is often not necessary to use an equity entry.》
Isn't it odd to abstract away the very reason firms exist from your analysis?
《between entities, every asset must be someone else's liability and vice versa.》
Does rehypothecation, where liabilities become assets, pose problems for this analysis?
I wonder, what would be a real world example of the two-entities double entry you called Novation? Here the Payor for granted promises to pay for the payee. That is the Payor would for granted increase his payables for the account of the Payee payables. Or is it just a building block for the quadruple entries that are real world deals?
《because banking transactions almost always use borrowed funds, assets and liabilities do balance, and so it is often not necessary to use an equity entry.》
Isn't it odd to abstract away the very reason firms exist from your analysis?
《between entities, every asset must be someone else's liability and vice versa.》
Does rehypothecation, where liabilities become assets, pose problems for this analysis?