2010/1/3 Keith Wright <kwri...@keithdiane.us>: > > CFO: What happened to the $12,345.67? > You: Well, you see sir, IEEE floating point...
Heh. Common misconception. The core problem, in accounting, is that some divisions and multiplications are allowed, and others are not. So for example, you are allowed to divide cost by number of shares to obtain share price (which is generally a flt pt number with 12 or more digits of precision). However, multiplying the number of shares by share price to obtain a dollar amount is forbiden, because doing so will always lead to roundoff errors in the cost, leading to all sorts of accounting imbalances, Example: bought 300 shares at $12.01/share on June 1st and bought 500 shares at $12.05/share on June 2nd. What was the average price paid? How many decimals are needed to correctly express this average share price? What number does one get when one computes the average share price times the total 800 shares bought? How does it compare to the actual cost paid? --linas
