Double Entry Accounting for Developers
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Double Entry Accounting for Developers
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Re: Double Entry Accounting for Developers
#2[deleted]
Re: Double Entry Accounting for Developers
#3I think the most important equation to understand about accounting is assets = liabilities + equity
ROA, ROE, etc come from the above formula.
Re: Double Entry Accounting for Developers
#4From the site:
"I found the core explanation of double entry accounting to be confusing. After some time I distilled it down to the following:
"Debits decrease the value of an account. Always. [1] Credits increase the value of an account. Always. [1]
"[1] (1, 2) This is absolutely not what accountancy teaches. You’ll quickly see that there is a lot of wrangling over what account types get increased/decreased with a debit/credit. I’ve simplified this on the backend as I strongly feel this is a presentational issue, and not a business logic issue."
I mean, this is just....wrong. Maybe I'm not smart enough to see why this isn't completely incorrect? I mean I feel mathematically this will work but goes against so many core accounting principles it won't have much use except in the simplest of cases.
Re: Double Entry Accounting for Developers
#5I think the most important equation to understand about accounting is assets = liabilities + equity ROA, ROE, etc come from the above formula.
more basic:
Assets = Net Equities
Re: Double Entry Accounting for Developers
#6I kind of expected to see a good, pragmatic explanation of why double-entry accounting is useful, the kinds of mistakes it catches, etc... kind of weird to see almost no emphasis on the double-entry nature at all.
Re: Double Entry Accounting for Developers
#7One thing I really appreciate about YNAB is that they ditched the obscure words with murky Latin roots and rules to memorize about flipping signs and whatnot, and just used the words "inflow" and "outflow". They don't mean anything different in this context than "debit" and "credit." But still, somehow, when you use the traditional words, the topic seems to be as difficult to explain as monads, while with the YNAB terms it ends up being obvious and intuitive.
Re: Double Entry Accounting for Developers
#8From the site: "I found the core explanation of double entry accounting to be confusing. After some time I distilled it down to the following: "Debits decrease the value of an account. Always. [1] Credits increase the value of an account. Always. [1] "[1] (1, 2) This is absolutely not what accountancy teaches. You’ll quickly see that there is a lot of wrangling over what account types get increased/decreased with a d…
Even bullet 4 has assets and expenses multiplied by -1. Completely .... wrong.
Maybe this might work for a bank where assets and liabilities are sort of flipped from a non-bank business?
Re: Double Entry Accounting for Developers
#9I used ledger [1] to track all of my expenses for roughly four years. It's a command line based double entry accounting tool. It was super interesting in terms of figuring out where money went and general double entry accounting techniques.
That said, it was a ton of work to keep up to date given that I was trying to track money when I spent it vs when it cleared my bank account, and those two often varied by several days. Add on top of that three kids and various purchases my wife would make, and it just became too much of a hassle. But it also helped me understand where my money was going each month much better.
The whole double entry idea is basically that every time there is a flow of money, it is going from one place and to another.
So each transaction has two entries:
1. Where the money is going
2. Where the money came from.
That's really what it boils down to.
Re: Double Entry Accounting for Developers
#10I think the most important equation to understand about accounting is assets = liabilities + equity ROA, ROE, etc come from the above formula.
I always felt that equation was confusing. Because then the sign has to be taught separately, or numbers have to have two columns (credit and debit) and you need to understand where each one is.
assets + liabilities + equity = 0
Seemed much more general. Double entry just became: everything (transactions, whole companies) sum to zero. Then just one other little thing (where money comes from in a transaction is positive, where you put it is negative) and you have the math.
IMH(and not accountancy)O