One could. but one probably shouldn't.
Extending the thought exercise, one could elect to just record all income /
expenses to the singular top-level accounts, wih no sub-division or
granularity.
Would it be a good idea? probably not.
Would GC allow it? of course.
Historical note ----- THAT is exactly how it was when double entry
bookkeeping was a new concept, say a thousand years ago. Assets and
liabilities had child accounts under them in the ledger. Necessary to
track the individual accounts of each borrower and each lender. << the
earliest users of double entry were in the money lending business >> But
the other side of transactions we think of as income and expense was equity.
Of course that was a PITA when the boss asked "how much interest did we
take in last month?" Somebody had to go through all the equity
transaction for the month to see which were interest and add those up.
Since this was a frequent question, some bright person came up with the
idea of introducing a TEMPORARY account type "income" and use that for
the other side and only once a period closing into equity << the
fundamental type of income is type equity. >> The same was done for
expenses. I don't know when, some hundreds of years ago at least.
MONEY --- Notice with double entry bookkeeping these early bankers
learned they could create money! Say representatives of banking houses
in London and Milan met and exchanged debt instruments with each other.
So now the London bank held notes payable at a Milanese banking house
while the bank in Milan held notes payable at a London banking house. An
English merchant planning to go on a buying trip to Italy could go to
the London banking house a purchase one of these notes (for "real"
money, silver or gold) and when arrived in Italy turn that note in to
the issuing house (receiving "real" money, silver or gold). No risk of
losing silver or gold while traveling to bandits, etc. as these notes
needed to be endorsed. All the banks needed was to keep on hand enough
silver and gold to buy back these notes as they arrived (the correct
percentage required to keep on hand learned over time -- nowadays this
tends to be regulated by governments or quasi governmental bodies)
Let's say that reserve is 50% <<each can create/exchange with each other
notes for twice the silver and gold they have in reserve>> Well that has
just doubled the amount of money that exist in the economy. Well as long
as it all keeps circulating. Were that circulation to stop, would disappear.
Michael D Novack
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