ACCT6007 Financial Accounting Theory and Practice - Critical Analysis Assignment Help

• Explain the three phases of blockchain technology? What is the potential use of blockchain technology in accounting? 

The emergence of blockchain technology has been witnessed in three phases, naming blockchain 1.0, 2.0 and 3.0. The association of blockchain 1.0 is with digitally induced financial services that mainly deals with cryptocurrency, digital financial transactions and remittances transactions. The blockchain 1.0 has introduced virtual currency system, under which no individual can bring modification in transaction record, assuring secure network of financial transaction (Weigand, Blums & de Kruijff, 2018). The second phase of emergence is blockchain 2.0, the industries have embraced the importance of blockchain and thus technology was accepted as blockchain as service (BaaS) (Wang, Lin & Luo, 2019). Under this smart contract and similar financial applications were introduced, which have substantially broadened the scope of financial applications. Smart contract enable autonomous verification, enforcement and execution of terms in financial contracts. It has been highlighted by Wang & Kogan (2018) that decentralization is the core aspect of second generation blockchain technology, which has eliminated the need of third party and thus counterparty risk has reduced substantially. Therefore, in second generation Blockchain technology, financial services scope has been supplemented by business applications. Finally, the third generation of blockchain technology is 3.0 which has expanded beyond financial and business applications (Wang et al., 2019). The implication of third generation blockchain technology are witnessed in the area of cloud storage, voting, attestation system and in Governmental services. Third generation has allowed the linkage of blockchain technology with internet of things, such that connection of physical objects with virtual aspects of blockchain technology can be facilitated (Rozario & Vasarhelyi, 2018). 

It has been provided in the study of Kozlowski (2018) that Blockchain technology is expected to support real time accounting, such that involved parties could gain instant access to financial information. Likewise, the technology can support creation of one’s own financial statements with complete integrity and auditing professionals could make comparison of financial information in easy way (Kokina, Mancha & Pachamanova, 2017). Additionally, based on analysis of Dai & Vasarhelyi  (2017) research, it has been noted that blockchain technology can enable the banking ledger processing, which provides that there is huge prospective application of blockchain technology in accounting. 

• In your own words explain your understanding of Triple Entry Accounting 

Third Entry Accounting system encompasses the contribution of three parties (two parties involved in transaction and one intermediary), with an aim of assuring that transactions are recorded independently and reliably. In triple entry accounting system, the role of intermediary is played by blockchain technology, which is a distributed ledger that automates the storage process of transactions and contributes in prevention of unreliable transaction recording (Rozario & Vasarhelyi, 2018). Immutable nature of blockchain assures that an entry cannot be altered once it is recorded and inserted into blockchain. The bloackchain based accounting system is considered as self-verifying accounting information system, which is transparent, secure as well as highly reliable. This system generally allows to create additional record of transactions which is stored in blockchain ledger (Weigand, Blums & de Kruijff, 2018). The stored data is saved at various nodes and levels, through which multiple users can view the needed information. The ability of blockchain technology to enable verification of accounting information allows to track any errors of transaction record and thus transactions are verified in effective way.  The smart contract feature of blockchain technology is also considered as important in triple accounting system as it enables to maintain enhanced control over the recording process in accounting. Additionally, based on insights obtaining from the study of Wang, Lin & Luo (2019) it has been noted that in triple accounting system, blockchain technology can be used in compliance with Enterprise Resource Planning (ERP) system, with an aim of assuring more accurate and transparent record keeping of financial transactions taking place within an organization. The submission of transaction in blockchain network is verified through multiple procedures, which enhance credibility of triple accounting system (Rozario & Vasarhelyi, 2018). For instance, the verification is done for recording of transaction by ERP system of organization, relative posting of specific transaction, asset transfer, correction of amounts and accounts and finally the verification is done of the party which post transaction (Kozlowski, 2018).