In a functioning Council Democracy, periodic changes to the Quality of Arbeit (QW) and the Quality of Geld (QM), which we had discussed previously as the “Arbeit Contributable” and “Geld Convertible” are to be expected. It is possible for the Value of Arbeit or the Price of Geld to be either overvalued or undervalued. The effects of the Attrition/Inaction Rate may be setting in and have yet to be accounted for as “Depreciation.” Aside from the LER and LERE Process, there are the usual concerns that the information recorded in the SSR was incorrect and needs to be addressed by the Accountant as part of the Accounting Cycle. All these cases and more are examples of where the concept of Trial Balancing meets the Convertibility Rate (CR).

The Convertibility Rate represents the ability of the Accountant to adjust, alter, or make changes to the accounts in the SSR before entering them in the Financial Ledger. The ideal is for the Accountant to make the necessary corrections at the end of the workweek, before allowing the Economic Planner to deposit a copy of the Financial Ledger at the State Bank.

A Trial Balance under Command-Obedience Account Bookkeeping consists of what can be called three journal entries in the SSR. Those are the “Unadjusted Trial Balance,” the “Convertibility Rate Balance,” and the “Adjusted Trial Balance.”

1. The Unadjusted Trial Balance were the amounts that the Delegate had entered within the SSR and later presented to the Accountant.
2. The Convertibility Rate Balance denotes the alterations that the Accountant is going to make to the original values in the Unadjusted Trial Balance.
3. The Adjusted Trial Balance are the final values that the Accountant will enter in the Financial Ledger to create the three financial statements, which are the Balance Sheet, Income Statement, and Workflow Statement. The values entered in the Adjusted Trial Balance are the same ones which will impact the WSA.  

Periodically, an Inspector will pay a visit to the Enterprise to inspect its Financial Ledger and SSR. They will schedule an interview with the Economic Planner, the Accountants, and the Delegate to develop a comprehensive report to the Central Planners at the Ministry of Economics, the Central Bankers at the Ministry of Finance, and the State Commissariats of Wages and Prices. Their purpose is to evaluate the statements provided to the State Banks by the Economic Planner and the information that was conveyed to the Investors at the Kontore. Everyone is expecting the Inspector to ensure that the economic health of the Enterprise being scrutinized is valid and up to date. This includes whether the Economic Planner and the Accountants are enforcing the rulings of the State Commissariats when it comes to the Prices of the goods and services it sells at the Tournament.

In a previous Entry, we learned that one notable application of the Convertibility Rate was to account for the delayed conversion of Arbeit-into-Geld by the Central Bank. That is not the only possibility where the Convertibility Rate becomes relevant. For the rest of this Entry, I have assembled a few notable instances where Trial Balancing may be used to apply the Convertibility Rate. Although it is possible that there may be other examples that have not yet been considered, the following examples should be considered as the more common ones. To begin, I will start by revisiting that list of State, Social, Student, and Digital Enterprises from an earlier Entry.

The Fischöder Railway Consortium received 10,000 GDM in its State Fund from the Council State as part of its everyday economic activities in July 1998. This Enterprise runs a rail transportation service, facilitating the movement of goods and personnel across hundreds of kilometers of railroads. Fischöder Railway Consortium reported that 1,000 GDM was spent on Inventory, 4,200 GDM on Equipment, and the remainder on the purchasing of a railcar. It generated 2,300 GDM in State Revenues from the issuance of train tickets to passengers traveling from the cities to the countryside and back.

The following table is the Statement of Self-Reciprocation for Fischöder Railway Consortium. The amounts listed below are inconsistent with the information provided above. To ensure that the information is correct, we need to examine the various journal entries and make the appropriate corrections with the Convertibility Rate.

Everything adds up both before and after the Convertibility Rate. As one could probably surmise, some of the accounts were overvalued, the accounts for Equipment was undervalued by 300 GDM, and there was no State Revenue made from selling train tickets to passengers. The Accountant in charge of the Convertibility Rate did the appropriate corrections, presenting them to the Economic Planner at the Adjusted Trial Balance.     

Here is another example of where Trial Balancing can become relevant. Biehr Apothecary Guild runs multiple pharmacies within a local area. This Enterprise is slated to undergo a Transvaluation of All Arbeit, which will undoubtedly impact how much Arbeit it contributes to the Life-Energy Reserve. Since the State Commissariats have ruled that the Enterprise is going to undergo a Transvaluation of All Arbeit, the Economic Planner must notify their Accountants to make the appropriate adjustments to the SSRs of each branch of the Biehr Apothecary Guild.  

The table below shows the Arbeit Contributable, the Transvaluation of All Arbeit, the Geld Convertible, the effects of Currency Depreciation, and the State Revenue. The Transvaluation of All Arbeit affects the Arbeit Contributable, whereas the effects of Currency Depreciation will impact the Geld Convertible. The State Revenue should be identical to the Geld Convertible. Since these entries do not involve a transactional sale, we do not need to worry about the State Fund or the Accounts Receivable and Accounts Payable of the Biehr Apothecary Guild.  

Based on the following table, we can infer that the Quality of Arbeit decreased from 250 GDM to 200 GDM due to a Transvaluation of 50 GDM. Conversely, the Quality of Geld was diminished from 600 GDM to 470 GDM to account for the effects of Currency Depreciation. The remaining 470 GDM were the State Revenue left over.  

Granted, Trial Balancing in any form is hardly going to be perfect. The usual problems of human error are always going to be a longstanding issue. The remaining examples are from a State Enterprise, the Fogel Steelworks Concern, where human error could skew the results of a Trial Balancing. If the Accountant does not know any better, they will never be able to realize them unless they consult the Delegate or are told about them by someone else. That other person could be the Economic Planner and the Inspector visiting the Enterprise, but it could also be their superiors, the Central Planner and Superintendent respectively. Alternatively, the State Commissars of the State Commissariats could intervene on behalf of the Administrator and Vocational Civil Servants of the Enterprise if necessary.

When one of the Accountants at the Fogel Steelworks Concern tried to implement Trial Balancing, they discovered that the Delegate failed to account for the Inventory, the Equipment, Vehicles, Buildings, and Land controlled by the State Enterprise. They remained unaccounted for among the entries of the Statement of Self-Reciprocation. The amounts for the Arbeit Contributable was entered incorrectly as 2,700 GDM was not counted. This drastically skewed the Geld Convertible when the Economic Planner tried to determine it for the Accountant. It also does not help that the State Revenues and State Expenses were entered in reverse. Instead of its State Fund gaining 15,000 GDM from transactional sales to Höbelheinrich Automotive, an automotive manufacturer and another State Enterprise, Fogel Steelworks Concern lost 15,000 GDM. Put another way, Höbelheinrich Automotive sold 15,000 GDM worth of steel to Fogel Steelworks Concern, when in reality it was Höbelheinrich Automotive that bought the steel.

The best and most suitable way of dealing with human error by anyone at the Enterprise is to offset it with the advantages of Council Democracy. Somebody else in the Enterprise, like the Administrator of the Enterprise or the rank-and-file Vocational Civil Servants, will notice that something is amiss about the information being provided to the State Banks. They may find out that the Investors have lower confidence in their reliability and transparency, pressuring them to exert accountability on the Economic Planner and their retinue of Accountants. It is because of this that the Delegate, who is an elected official with a seat at the Councils, must assume the characteristics of a Bookkeeper. They need to be familiarized with the methodology of the Economic Planner and their retinue of Accountants. If they cannot, then one of the Accountants should assist them at the workspace.  

Categories: Compendium, Work-Standard Accounting Practices

Tags: Accounting, Bookkeeping, Economics, Finance, Philosophy, Politics, Psychology, Socialist Finance, Third Place, Work-Standard, Work-Standard Accounting Practices