Logical Conceptualization

For purposes of communication within an area of knowledge (such as a science or business) we need an unambiguous vocabulary, a controlled vocabulary. The terms of a controlled vocabulary need to be articulated and related in a rigorous, explicit, consistent, formal way.  Other ways to describe this notion of a controlled vocabulary is a "jargon" or "specialized language" or "technical language".

A system is cohesive groups of interrelated, interdependent components that can be natural or human-made. A system has patterns.

A system can be explained by a logical theory.  A logical theory is an abstract conceptualization  of specific important details of some area of knowledge. The logical theory provides a way of thinking about an area of knowledge by means of deductive reasoning to derive logical consequences of the logical theory.

A logical theory enables a community of stakeholders trying to achieve a specific goal or objective or a range of goals/objectives to agree on important logical statements used for capturing meaning or representing a shared understanding of and knowledge in some area of knowledge.

A logical theory forms a logical conceptualization and is made up of a set of logical models, structures, terms, associations, rules, and facts. In very simple terms,

  • Logical conceptualization: A logical conceptualization is a set of models that are consistent with and permissible per that logical conceptualization.
  • Model: A model  is a set of structures that are consistent with and permissible interpretations of that model.
  • Structure: A structure is a set of logical statements which describe the structure.
  • Logical statement: A logical statement is a proposition, claim, assertion, belief, idea, or fact about or related to the area of knowledge to which the logical conceptualization relates.  There are five broad categories of logical statements: 
    • Terms: Terms are logical statements that define ideas used by the logical conceptualization such as “assets”, “liabilities”, “equity”, and “balance sheet”. A term is a defined "thing".  Each term tends to be a member of some class or set of things (terms) or type of thing.  Each term (thing) tends to be different from every other term (thing) in some way. A class or type of thing can have a subclass or subtype.
    • Associations: Associations are logical statements that describe permissible interrelationships between the terms such as “assets is part-of the balance sheet” or “operating expenses is a type-of expense” or “assets = liabilities + equity” or “an asset is a ‘debit’ and is ‘as of’ a specific point in time and is always a monetary numeric value”. Associations tend to be "is-a" (class-subclass, general-special, wider-narrower, type-subtype) or "has-a" (whole-part, has-part, part-of) or "has-role".
    • Rules: Rules are logical statements that describe what tend to be convertible into IF…THEN…ELSE types of relationships such as “IF the economic entity is a not-for-profit THEN net assets = assets - liabilities; ELSE assets = liabilities + equity”.
    • Facts: Facts are logical statements about the numbers and words that are provided by an economic entity within a financial report.  For example, the financial report might state “assets for the consolidated legal entity Microsoft as of June 20, 2017 was $241,086,000,000 expressed in US dollars and rounded to the nearest millions of dollars.
    • Properties: Properties are logical statements about the important qualities and traits of a model, structure, term, association, rule, and fact. A property is a type of an association, this thing has this property.

Fundamentally, a logical conceptualization is a set of logical statements.  Those logical statements can be represented in human-readable form or they could be expressed in machine-readable form.  Once in machine-readable form, those logical statements can be interrogated using software applications.  To the extent that this can be performed effectively; software tools can assist professional accountants, auditors, financial analysts, and others working with those logical statements.


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