Assignment | Financial Accounting Theory and Practice

Running head: FINANCIAL ACCOUNTING THEORY AND PRACTICE
Financial Accounting Theory and Practice
Name of the Student
Name of the University
Author’s Note

FINANCIAL ACCOUNTING THEORY AND PRACTICE1
Table of Contents
Introduction................................................................................................................................2
Three Phases of Blockchain Technology and Its Potential Use in Accounting.........................2
Understanding of Triple Entry Accounting................................................................................3
Agreement or Disagreement with Any Arguments....................................................................4
Potential Issues or Problems with Blockchain Technology in Accounting...............................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

FINANCIAL ACCOUNTING THEORY AND PRACTICE2
Introduction
The main aim of this essay is to undertake the analysis of various aspects of the article
named “Toward Blockchain-Based Accounting and Assurance” by Jun Dai and Miklos A.
Vasarhelyi. In the recent years, blockchain has been serving as a potentially transferred
information technology which is used for Bitcoin trading. The main benefits of blockchain
technology are reduction in trading cost, increase in the speed to settle transactions, reduction
in fraud risk, improve in auditability and others. The following discussion shows different
aspects of blockchain while referring the provided article.
Three Phases of Blockchain Technology and Its Potential Use in Accounting
The development of blockchain can be seen through three phases which are
blockchain 1.0, 2.0 and 3.0. These are discussed below:
Phase 1.0 – The sole focus of blockchain 1.0 is the cryptocurrency interchange. This phase
helps in the functions like digital money transfer, remittance and payments (Peters & Panayi,
2016).
Phase 2.0 – The involvement of same kind of trading can be seen in phase 2.0 of blockchain,
but it provides the users with a wider possibility in financial application such as digital asset
ownership, derivatives, smart property and others. In this phase, there was the introduction of
a new application named ‘smart contract’ which refers to computer programs in blockchain
that assists in automatic verification, enforcement and execution of contract terms. In
addition, these smart contracts help to encode the agreed upon situations and rules related to
different trading parties. Apart from these, smart contracts in blockchain assist in encoding
other terms as well as execution of tasks based on the pre-specified rules (Liang et al., 2017).
Phase 3.0 – The further expansion of blockchain technology can be seen in phase 3.0 further
than business application and financial application. Under this phase, some of the