Work-Standard Accounting Practices: Financial Reporting for Profit and Utility Maximization

The financial data intended for the Chart of Accounts (CoA) is oftentimes drawn from the financial reports compiled by accountants and vetted by the auditors. The concept of financial reporting becomes dependent on whether the Accounting Profession is focusing on Kapital and Schuld or Arbeit and Geld. In Production for Profit and Production for Utility, an average privatized commercial firm would compile five sets of financial reports that are of interest to the following “stakeholders”: the executive leadership, management and employees; the Fractional-Reserve Banking System and Financial Markets; the regulatory bodies of Parliament; and the Market itself.

Investors and creditors from the Fractional-Reserve Banking System and Financial Markets supply the privatized commercial firm with Kapital. Interest-laden Loans, as well as LCFIs (Liberal Capitalist Financial Instruments) such as Stocks and Bonds provide Kapital in exchange for Schuld. They need financial reports to assess how well the privatized commercial firm, as a debtor, is paying off their Schuld.

The executive leadership and managerial staff rely on periodic financial reports to evaluate the overall performance of their privatized commercial firms. Information obtained from those financial reports allows them to make more informed decisions that will yield more Kapital from the transactional sales.

As for the employees themselves, they need financial reports to determine whether they are being paid fairly. If they happen to be unionized and are not being paid enough Kapital by the executive leadership and managerial staff, those financial reports will become the catalyst behind their subsequent decision to go on strike and demand more Kapital.

Parliament receives a set of financial reports as part of its own efforts to enforce tax compliance from the privatized commercial firm. Any Kapital owed to Parliament in taxes are to be recorded and paid in full. In addition to taxation authorities, regulatory authorities are also relying on those financial reports to determine if the privatized commercial firm is complying with any regulations set by Parliament.

Lastly, in Production for Profit and Production for Utility, the concept of the “Market” is the institutional actor behind the Market/Mixed Economy. Production processes and the transactional sales for finished goods and services stem from the Market. This Market differs from the Financial Market as it is more concerned about the sales of goods and services to Households and other privatized commercial firms. We will discuss more about the Work-Standard’s equivalent in a later Entry.   

Types of Liberal Capitalist Financial Reports

There are four major types of financial reports that the Accounting Profession uses in Production for Profit and Production for Utility. All four rely on the Double-Entry Account Bookkeeping System for their calculations. Only one of the financial reports is a broad overview of the privatized commercial firm’s Assets, Liabilities, and Equities. The other three provide greater emphasis on its Assets, its Liabilities, and its Equities. These financial reports will eventually be consolidated into the Chart of Accounts (CoA), which statisticians would later compile, eventually establishing the System of National Accounts (SNA) for economists and political scientists to evaluate the performance of a given Liberal Capitalist regime.

The four financial reports are the “Balance Sheet,” the “Income Statement,” the “Cashflow Statement,” and the “Statement of Shareholder Equity.”  

The Balance Sheet presents an overview of the Assets, Liabilities and Equities owned by the privatized commercial firm. It serves as a real-time assessment of the ratio between the Quantity of Kapital and the Quantity of Schuld for a privatized commercial firm. Most Balance Sheets in Production for Profit and Production for Utility are released four times a year on a quarterly basis. A Balance Sheet’s Assets are split between the Liquid Assets and the Current Assets. The former contains the actual Quantity of Kapital, the latter denoting how much Kapital is being earned from transactional sales and the inventories of finished products and “Commodities.” The Current Liabilities tracks all of the known expenditures of the privatized commercial firm and its Quantity of Schuld. The Current Equities pertains to the Quantity of Kapital intended for LCFIs (Liberal Capitalist Financial Instruments).  

When accountants are tasked with finding more precise information about a privatized commercial firm’s Assets over the long-term, the Income Statement is created. Unlike the Balance Sheet, whose overview is short-term, the Income Statement is an annual financial report at the very least. It will contain information about the privatized commercial firm’s Quantity of Kapital, how much Kapital is being generated from its own economic activities, and the overall ratio between revenues and expenditures. The Value of any Stocks related to the privatized commercial firm is dependent on this financial report.

The Cashflow Statement describes how well the privatized commercial firm is handling its Quantity of Schuld. Most privatized commercial firms are not going to create enough Kapital to sustain themselves, so they are encouraged to borrow Kapital from selling Stocks and Bonds on the Financial Market as well as receiving Interest-laden Loans from privatized commercial firms. Since investors and financial institutions expect the privatized commercial firm to pay back its Schuld, the Cashflow Statement describes how it is spending Kapital for its own economic activities as well as servicing the Quantity of Schuld. Every economic activity related to the privatized commercial firm is going to rely on Kapital to create more Kapital, so the Cashflow Statement becomes a documentation of how Kapital is being allocated and spent on creating more Kapital and paying down Schuld.

The Statement of Shareholder Equity may be included in the Balance Sheet or treated as its own financial report. It really depends on the size and composition of the economic organization in question as well as the number of LCFIs that it has in circulation at the Financial Market. To record the Quantity of Kapital earned from those LCFIs, the Statement of Shareholder Equity is employed to monitor their Values as they accumulate Kapital on their own. Any investments made by that same economic organization will also be found here as well.

Implications of Liberal Capitalist Financial Reporting

Some noteworthy observations deserve to be addressed in relation to the four types of financial reports in Production for Profit and Production for Utility. Besides basing their calculations on the Double-Entry Account Bookkeeping System, a pattern can be discerned based on how the Accounting Profession formats them. The four financial reports correspond to the incomes, production, and expenditures of an economic organization. The Balance Sheet and Statement of Shareholder Equity both pertain to the production outputs, the Income Statement is related to the incomes, and the Cashflow Statement is concerned with the expenditures. The pattern itself parallels how the GDP (Gross Domestic Product) Rate tracks economic performance through an Expenditure Approach, an Income Approach, and an Output Approach.

What would be the Work-Standard’s alternative financial reports for Arbeit and Geld? How compatible are those proposed financial reports with Production for Dasein and the Total Productive Potential (TPP)? Can an accountant, by process of elimination, determine how the economic activities of a Cooperative or a State Enterprise at the micro level contribute to the economic life of a Socialist Nation at the macro level? Will the financial reports be categorized by the ratio between Arbeit and Geld, tailored to the State, Totality, and Self, or both? Is it even possible to develop such financial reports where the State, Totality and Self are equally capable of determining the Arbeit and Geld of an economic organization for auditing purposes?  

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