Hey guys, Nice chatter here. I'm familiar with accounting but still not comfortable with the negative numbers in ledger (for certain categories of accounts). This thread is very helpful - I'm going to star it for reference when I get back to do some heavy lifting for my accounting work.
Thanks, Kinley On Friday, May 8, 2015 at 3:19:18 AM UTC+6, Rick F wrote: > > Unearned revenue is definitely not a liability. > > If you're struggling with accounting, you shouldn't be messing with > accrual based accounts like unearned income or accounts payable anyway. > Just stick with cash based accounts, accounts that only change when cash > actually changes hands. > > Just keep it simple. Start with the big five and add sub-accounts only > when you have to. > > 2015/1/1 Sale > Assets $100.00 > Income > > 2015/1/1 Account transfer > Assets $10.00 > Assets > > 2015/1/2 Bill > Expenses $50.00 > Assets > > > So now you know when cash moved around, but it's not very useful. Take a > look at that account transfer transaction. It doesn't tell you anything. > You probably would like to know how much is in your checking account. > This doesn't really tell you. So add a checking subaccount. > > 2015/1/1 Sale > Assets:Checking $100.00 > Income > > 2015/1/1 Account transfer > Assets:Savings $10.00 > Assets:Checking > > 2015/1/2 Bill > Expenses $50.00 > Assets:Checking > > > What if you want to know how much you spent on your electric bill last > year? Again, you can't find that out from this account structure so add a > subaccount. > > 2015/1/2 Bill > Expenses:Electricity $50.00 > Assets:Checking > > > What if you also want to know how much you spent on all utilities in > addition to asking about electricity. That's right, just add another > subaccount. Since Electricity is also a utility, put it into the Utilities > account: > > 2015/1/2 Bill > Expenses:Utilities:Electricity $50.00 > Assets:Checking > > What if you want to know how much it cost you to maintain your office, not > just your utilities. Add yet another subaccount. > > 2015/1/2 Bill > Expenses:Office:Utilities:Electricity $50.00 > Assets:Checking > > > What if you don't want to know that? Then don't add the extra level. > > What if you want to know how much of your money is in which bank? Add a > subaccount: > > 2015/1/1 Account transfer > Assets:First National Credit Union:Savings $10.00 > Assets:Citibank:Checking > > > What if you want to know how much of your money is in credit unions vs. > banks vs. brokerage accounts? That's right, add a subaccount. > > 2015/1/1 Account transfer > Assets:Credit Unions:First National Credit Union:Savings $10.00 > Assets:Banks:Citibank:Checking > > What if you never need to ask that question? Save yourself the trouble > (and typing) and just don't add those subaccounts. There's a strong > temptation when you're starting accounting to try and account for > everything. What if you want to keep track of local vs. remote banks? Add > a subaccount, otherwise don't. Save yourself from having to type something > stupid like > > "Assets:Liquid:Banks:Multinational:Remote:USA:Northeast:New York:New > York:Manhattan:Citibank:Checking" > > every time you write a check. > > What if you want to keep track of what income came from sales vs. from > your salary? Add another subaccount! > > 2015/1/1 Sale > Assets:Checking $100.00 > Income:Sales > > > Now let's talk about negative and positive. Note I cleverly wrote all > those transactions without a single minus sign. All I had to do was record > where the money ended up as the first thing and left the other amount to be > implied. I could have written it in: > > 2015/1/1 Sale > Assets:Checking $100.00 > Income:Sales -$100.00 > > > But Ledger doesn't make me do it, so I don't. > > Wait a minute. Why are sales negative? That's confusing, but so be it. > That's not a bad reason to leave the negative side of your transactions to > Ledger's inference. I started with where the money ended up, that's > positive, so wherever it came from is negative. Does that mean expenses > are positive? You betcha. That's where my money ended up. If that's > where the money in the transaction ended up, that means its positive. I > certainly have no trouble understanding the money LEFT my checking account, > so it makes sense that side of the transaction is negative. > > I'm not saying don't use minus signs. Sometimes it would be more complex > to try and split a transaction into enough pieces to get rid of all the > minus signs. I only did it in this case to drive home the point: Wherever > the cash ended up, that part of the transaction is positive. If the cash > didn't end up there, it's negative. > > That's enough for now. Don't read past this point or you'll just get > confused. > > It shouldn't be said, but if I don't say something it'll bug me the rest > of the day. Technically, cost of goods sold is an income category, not an > expense, because it goes into calculating your income, not your expenses. > If you buy a widget for $3 and sell it for $5, that's $2 of income. > > Now just because it's a subaccount of income doesn't mean it's money > coming in. Buying the widget for $3 is definitely money going out, but > money doesn't normally go out when you're talking about income, so that > means cost of goods sold is a negative income account and since income is > already negative in ledger, that makes it a double negative account which > is positive, which....uh...... You know what? Just forget I brought it > up. If you record it as an expense your bottom line (profit) will still > work out just fine. > > On Thursday, May 7, 2015 at 9:15:18 AM UTC-7, Kev Lau wrote: >> >> Hi Stefan, >> Thanks for your input. >> Yes I am trying to limit to 5 accounts. Expenses,Revenue,Assets,Liability >> and Equity. >> About positive and negative, I am still little confused so will go back >> to reading more on Debit and Credit systems. i think I need help there. >> Yes. I should have first a Liabilities:Unearned_Revenue: before going to >> the Expenses:CostofGoodsSold. >> >> I think I will familiarize myself with positive and negative accounts. >> >> Thanks very much for the constructive feedback. It helped open my eyes. >> >> Will rectify the mistakes and re-post. Your feedback is very valuable to >> me. >> >> >> Regards >> Kevin >> >> >> On Thursday, May 7, 2015 at 4:52:16 PM UTC+7, Kev Lau wrote: >>> >>> Hi, >>> I am still having difficulties with coming up with a proper mean of >>> using a ledger for my business. I am hoping that someone here could see my >>> Ledger and tell me if it looks sound. I don't want to make alot of entries >>> and later realize I have been doing it wrong. I have read some material on >>> accounting and feel that I understand how to make entries(but not sure how >>> well I am organized and structured) >>> >>> Below is a sample of my hypothetical testing ledger. If you could have a >>> look and give me some advise/tips I would deeply appreciate it. >>> >>> >>> >>> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK US$-12,998.06 >>> ;cash recd, debit to cash acct. >>> #GENERAL_ELECTRIC:LIABILITIES:ACCOUNT_PAYABLE:VENTURE_ENTERPRISE US$ >>> 12,998.06 >>> >>> #GENERAL_ELECTRIC:EXPENSES:BANK:CITBANK:FEES US$-19.35 ;cash paid >>> out credit to cash acct. >>> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-77.41 ;cash paid >>> out credit to cash acct. >>> #GENERAL_ELECTRIC:ASSETS:BANK:CASH >>> >>> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK US$-4,998.06 >>> #GENERAL_ELECTRIC:LIABILITIES:ACCOUNT_PAYABLE:VENTURE-ENTERPRISE US$ >>> 4,998.06 >>> >>> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-34.19 >>> #GENERAL_ELECTRIC:EXPENSES:COST_OF_GOODS_SOLD:TRIA_SOLAR:INV004 >>> US$-12,000.00 >>> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-34.19 >>> #GENERAL_ELECTRIC:EXPENSES:COST_OF_GOODS_SOLD:DYNO_WORKS:INV004 >>> US$-3,808.00 >>> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK >>> >>> #GENERAL_ELECTRIC:REVENUE:SALES:MICROSOFT:INV004 >>> >>> US$6,000.00 >>> #GENERAL_ELECTRIC:ASSETS:RECEIVABLES:INV004 >>> US$-6,000.00 >>> >>> >>> -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. 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