Ok, I got what you mean, but I'm not buying cabbage, I'm *growing* them.
So they become assets without direct expenses.
Of course there are expenses, but they are still hidden behind plowing,
sowing etc. at the time of acquisition of the cabbages.
That's why I started posting them to the ledger as an income:
2018/03/21 farm
income -5 cabbage
inventory:farm 5 cabbage
Now Ismael suggested to 'buy' them at a zero price.
That's ok with me, as long as I can track them as a commodity from harvest
to sales along the different locations ('warehouses') where they may pass,
and as long as I can clean up the inventories when they leave.
Klauss suggested to put the sales revenue in an account separate from
income but although I perfectly understand why that may be good, I'm a bit
hesitant to do that because that would change the whole way I'm keeping
books until now, and I'm not saying I'm doing it wrong all the time. I just
want to track the items through the inventories. :)
My opinion is that I will be able to calculate the net revenue by just
subtracting total expenses from total income.
Your explanation about expenses and assets is re-assuring to me in the
sense that I think I can 'get away' with my maybe unconventional style of
farm accounting, so I guess I'll just try to write it like this:
2018/03/21 plant
; consumed in plant
; balance of cabbages is zero
expenses 5 cabbage
inventory:plant -5 cabbage
2018/03/21 plant
; entry of salads produced
income -2 salad
inventory:store 2 salad
2018/03/24 buyer
; Now the salads are in store and being sold.
inventory:store -2 salad {= 2 $}
cash 2 salad {= 2 $}
Now the cabbages *and* salads are both gone,
the income is from the 2 salads sold,
at a price of $ 2,
the revenue is in cash,
and net revenue can be calculated as income-expenses.
Thanks for your help!
On Tuesday, March 20, 2018 at 3:35:10 PM UTC, Ismaël Bouya wrote:
>
> Hi Ella,
> What will follow will probably not solve your problem, but hopefully
> it will give a better understanding :)
>
> I understand that from your point of view, buying cabbage is an expense.
> However, it is not the case here since you’re not making an expense:
> you’re swapping dollars (one commodity) for cabbage (another
> commodity) at a given rate (1 for 1). An expense would be an entry like:
>
> 2018/03/21 Buy cabbage
> Expenses:Farm tools $6
> Cash
>
> But then you lose track of your cabbages! In other words, you cannot
> consider your cabbage both as an expense and as an asset, it has to be
> something. In your case, since you want to track its becoming, it’s an
> asset. Or, said another way, your $6 has become 6 cabbage, you didn’t
> "lose" them.
>
> To see the difference, you can imagine that scenario:
> Say that while buying your cabbage at your local grocery store, you used
> your credit cards, and that your bank charges you $1 for each
> transaction. Also, you buy at the mean time 1kg of carrots at $3. You
> would have a transaction like that:
>
> 2018/03/21 My best grocery store
> Expenses:Bank charges $1
> Expenses:Vegetables $3
> Inventory:Farm 6 cabbage @ $1
> Cash -$10
>
> In that example, the charge expense goes to your bank, so it’s lost
> forever (and your bank won it).
>
> The vegetables you have them in your hands, but you don’t want to track
> them (they’re lost once you eat them) You could of course track them as
> an asset, and tomorrow when you eat them, add an expense of 1kg carrots
> from your cellar to expense, but today you didn’t spend money, you only
> swapped them for another thing.
>
> And the cabbage you’ve got in your hand will be used later as an asset
> (to track its becoming), so it cannot be counted as an expense.
>
> It’s really all a matter of what is an expense (you spent it) and what
> is an asset (you get it, and track its becoming)
>
> (Tue, Mar 20, 2018 at 05:38:21AM -0700) Ella Lobatina :
> > Ismael, thanks for your write-up.
> > For me though net gain = income - expenses.
> > That's why I booked the harvested cabbages as income in term of
> > commodities, and why not? At the time of selling the ultimate processed
> > produce we can apply the market price to the remaining commodity (that
> > which is not consumed in the process).
> > If you want to apply a price to the cabbages, that would be equal to the
> > expenses of plowing the land, planting the seeds, putting fertilizer,
> > harvesting etc.
> > It's difficult if not impossible to implement the cost of produce like
> that
> > in ledger.
> > That's why we aggregate the expenses so that later we can divide them by
> > the number of cabbages and calculate their price of production.
> >
> > Then income - expenses = net gain
> >
> > Your way of 'finding' the cabbages appears cool to me though.
> > And maybe accounting-wise more correct, I don't know.
> >
> > Thanks for your food for thought!
> >
> >
> > On Tuesday, March 20, 2018 at 12:01:20 PM UTC, Ismaël Bouya wrote:
> > >
> > > Hi Ella,
> > > I think you’re missing something important in your workflow.
> > >
> > > Your income should be the net gain: At some point, you bought
> something
> > > to start with (or farmed/found them, which should(?) be seen as the
> same
> > > as buying them for $0):
> > >
> > > 2018/03/21 farm
> > > inventory:farm 5 cabbage @ $0
> > > cash
> > >
> > > Those cabbage grow into a salad:
> > >
> > > 2018/03/21 farm
> > > inventory:plant 2 salad @ $0
> > > inventory:farm -5 cabbage {$0} @ $0
> > >
> > > And you sell that salad:
> > >
> > > 2018/03/21 farm
> > > cash $4
> > > inventory:plant -2 salad {$0} @ $0
> > > income:farm
> > >
> > > ------------------
> > > Now let’s be a little more complete (you’ll adapt it to your need)
> > >
> > > You buy 6 cabbage at $1 each
> > > 2018/03/21 farm
> > > inventory:farm 6 cabbage @ $1
> > > cash
> > >
> > > Each of your cabbage is priced $1, and you spend $6.
> > >
> > > You farm them, you need 2 cabbages to make one salad (I’m not a farmer
> > > maybe it doesn’t exist :p ), but a pair of them is lost:
> > >
> > > 2018/03/21 farm
> > > inventory:plant 2 salad
> > > inventory:farm -6 cabbage
> > > expenses:farm loss 2 cabbage
> > >
> > > Then you sell those two salad (each costed 2 cabbages, i.e. $2), at $5
> > > each:
> > >
> > > 2018/03/21 farm
> > > cash $10
> > > inventory:plant -2 salad @ $2
> > > income:farming
> > >
> > > You end up with a $6 net income ($10 - $4 cost), and $4 in your pocket
> > >
> > > $ ledger bal:
> > > $4 cash
> > > $-6 income:farming
> > > 2 cabbage expenses:farm loss
> > >
> > > if you want to track the losses in terms of cash, just add costs ("@")
> > > in the middle one:
> > > 2018/03/21 farm
> > > inventory:plant 2 salad @ $2
> > > inventory:farm -6 cabbage @ $1
> > > expenses:farm loss
> > >
> > > $ ledger bal:
> > > $4 cash
> > > $-6 income:farming
> > > $2 expenses:farm loss
> > >
> > > Hope it helps/answer your questions
> > > --
> > > Ismael
> > >
> >
> > --
> >
> > ---
> > You received this message because you are subscribed to the Google
> Groups "Ledger" group.
> > To unsubscribe from this group and stop receiving emails from it, send
> an email to [email protected] <javascript:>.
> > For more options, visit https://groups.google.com/d/optout.
>
> > Ismael, thanks for your write-up.
> > For me though net gain = income - expenses.
> > That's why I booked the harvested cabbages as income in term of
> > commodities, and why not? At the time of selling the ultimate
> processed
> > produce we can apply the market price to the remaining commodity
> (that
> > which is not consumed in the process).
> > If you want to apply a price to the cabbages, that would be equal to
> the
> > expenses of plowing the land, planting the seeds, putting fertilizer,
> > harvesting etc.
> > It's difficult if not impossible to implement the cost of produce
> like
> > that in ledger.
> > That's why we aggregate the expenses so that later we can divide them
> by
> > the number of cabbages and calculate their price of production.
> >
> > Then income - expenses = net gain
> >
> > Your way of 'finding' the cabbages appears cool to me though.
> > And maybe accounting-wise more correct, I don't know.
> >
> > Thanks for your food for thought!
> >
> > On Tuesday, March 20, 2018 at 12:01:20 PM UTC, Ismaël Bouya wrote:
> >
> > Hi Ella,
> > I think you’re missing something important in your workflow.
> >
> > Your income should be the net gain: At some point, you bought
> something
> > to start with (or farmed/found them, which should(?) be seen as the
> same
> > as buying them for $0):
> >
> > 2018/03/21 farm
> > inventory:farm 5 cabbage @ $0
> > cash
> >
> > Those cabbage grow into a salad:
> >
> > 2018/03/21 farm
> > inventory:plant 2 salad @ $0
> > inventory:farm -5 cabbage {$0} @ $0
> >
> > And you sell that salad:
> >
> > 2018/03/21 farm
> > cash $4
> > inventory:plant -2 salad {$0} @ $0
> > income:farm
> >
> > ------------------
> > Now let’s be a little more complete (you’ll adapt it to your need)
> >
> > You buy 6 cabbage at $1 each
> > 2018/03/21 farm
> > inventory:farm 6 cabbage @ $1
> > cash
> >
> > Each of your cabbage is priced $1, and you spend $6.
> >
> > You farm them, you need 2 cabbages to make one salad (I’m not a
> farmer
> > maybe it doesn’t exist :p ), but a pair of them is lost:
> >
> > 2018/03/21 farm
> > inventory:plant 2 salad
> > inventory:farm -6 cabbage
> > expenses:farm loss 2 cabbage
> >
> > Then you sell those two salad (each costed 2 cabbages, i.e. $2), at
> $5
> > each:
> >
> > 2018/03/21 farm
> > cash $10
> > inventory:plant -2 salad @ $2
> > income:farming
> >
> > You end up with a $6 net income ($10 - $4 cost), and $4 in your
> pocket
> >
> > $ ledger bal:
> > $4 cash
> > $-6 income:farming
> > 2 cabbage expenses:farm loss
> >
> > if you want to track the losses in terms of cash, just add costs
> ("@")
> > in the middle one:
> > 2018/03/21 farm
> > inventory:plant 2 salad @ $2
> > inventory:farm -6 cabbage @ $1
> > expenses:farm loss
> >
> > $ ledger bal:
> > $4 cash
> > $-6 income:farming
> > $2 expenses:farm loss
> >
> > Hope it helps/answer your questions
> > --
> > Ismael
> >
> > --
> >
> > ---
> > You received this message because you are subscribed to the Google
> Groups
> > "Ledger" group.
> > To unsubscribe from this group and stop receiving emails from it,
> send an
> > email to [1][email protected] <javascript:>.
> > For more options, visit [2]https://groups.google.com/d/optout.
> >
> > References
> >
> > Visible links
> > 1. mailto:[email protected] <javascript:>
> > 2. https://groups.google.com/d/optout
>
>
>
> --
> Ismael
>
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