Actually, an accountant does not expect liabilities to appear negative, but
positive. Accounting (at least in US) follows the principle:
Assets = Liabilities + Capital(Equity)
Debits make assets more positive. Credits make liabilities and capital more
positive. So, the chart of accounts in the opening screen should actually
not add to zero. At least at the end of an accounting cycle, though, the
assets should add to be the same as the liabilities + capital. In the
middle of a cycle they typically won't because of incomes and expenses not
being incorporated yet into the computation of capital/equity.
I sent a fairly big email on this to Dave P. Maybe it should be posted to
the group.
The standard terms in accounting are debits and credits, but most (even
educated people) who have not had an accounting class in a while won't get
them straight. This is something Christopher B. noted in a separate post.
So what do we do? I think it would be smart to have a home/business switch
that would do the following:
Home
- has "real world" titles on debit/credit columns to avoid confusion
- uses sum to zero logic rather than assets = liab + equity
- has expense accounts be accrued accounts (really assets) that go down as
you spend money
Business
- has debit/credit titles
- uses assets = liab + equity and income = expenses + change in equity logic
- has expense accounts as true expenses which go up as you spend money
I've not even taken a cursory look at the code (yet), so I have no true idea
how difficult this would be. But it seems like only a few titles and sign
switches to me - not that hard.
Rob Coker
> -----Original Message-----
> From: Christopher Browne [mailto:[EMAIL PROTECTED]]
> Sent: Tuesday, November 23, 1999 12:44 AM
> To: [EMAIL PROTECTED]
> Subject: Re: equity accounts and timed transactions
>
>
> On 22 Nov 1999 20:22:47 CST, the world broke into rejoicing as
> John Hasler <[EMAIL PROTECTED]> said:
> > Rob Coker writes:
> > > I'm wondering if it would be good to have a configuration
> switch one could
> > > use to enable accounts to work the way a (at least my)
> business accounting
> > > book says they ought with the default being the way it is now.
> >
> > Christopher Browne writes:
> > > I'll have to take a look at it. You might be right.
> >
> > Also nice would be a switch that would make it use conventional
> debit and
> > credit notation instead the odd headings it uses now.
>
> I have to say "correct on both accounts." (There be bad puns there...)
>
> The asset and liabilities appear to be appropriately handled; it makes
> sense for assets to "appear positive" (e.g. - be debits) whilst
> liabilities
> should "appear negative" (e.g. - be credits) and similarly, one would
> expect liabilities to "look negative."
>
> However. Incomes should be credits, e.g. - appearing negative,
> and expenses
> should be debits, e.g. - appearing positive, so that they all
> offset nicely.
>
> It should be the case that the sum of the values of all the
> accounts adds to
> 0; in a sample that I just set up, the signs on the
> expenses/incomes are all
> backwards so that the balance sheet does not balance.
>
> This is definitely a Bad Bug. Note to all: On the front screen (with the
> tree of accounts), the total of the amounts should add to $0. Always.
>
> I can't place where the code controls the sign of a given account, but I
> *do* see that the names of the titles are set in src/register/splitreg.c,
> and it should be not overly difficult to configure that to optionally
> always use Debit/Credit rather than using ledger-specific functionality.
> Indeed, the contents of splitreg.c should get ported to the Guile side
> of things, as they represent one-time definitions that would be more
> usefully kept dynamic + scriptable.
> --
> "There must be some way to read input from the terminal...."
> -- Mly
> [EMAIL PROTECTED] - <http://www.ntlug.org/~cbbrowne/financial.html>
>
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