Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Double-entry bookkeeping as a directed graph

matheusportela.com

Post reply on HN
Print view View original

141–150 of 388 posts

Re: Double-entry bookkeeping as a directed graph

#141

Post by globular-toast »

mijoharas wrote: post #122
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account you're talking about, which is an utterly absurd (mis)use of language and the main reason people find this confusing What would you suggest as an improvement? The article suggests "incoming" and "outgoing" which seems to have the same issue, as does everything I see in your comment (the person spendin…

It doesn't matter about the person buying lemonade. Their accounts are theirs alone and don't affect your accounts.

Re: Double-entry bookkeeping as a directed graph

#142

Post by DwnVoteHoneyPot »

mijoharas wrote: post #122
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account you're talking about, which is an utterly absurd (mis)use of language and the main reason people find this confusing What would you suggest as an improvement? The article suggests "incoming" and "outgoing" which seems to have the same issue, as does everything I see in your comment (the person spendin…

When I talk to accountants, I get confused with debit/credit so I use "increase" and "decrease". Everyone seems to understand me fine. For example, "Decrease cash", to buy equipment "increases assets". "Increase cash" by borrowing money is "increasing liability".

Re: Double-entry bookkeeping as a directed graph

#143

Post by bongodongobob »

juped wrote: post #119
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

Double entry bookkeeping is very easy to understand once you ditch the ridiculous "accounting equation". "Credit" means "source", "debit" means "sink". Suppose you invoice a customer 10,000 euros. You now have a promise for 10,000 euros, but you account in dollars so it's a promise for 11,000 dollars at current exchange rates. So you credit the source, your "Income: Customer A" account ("income" and "expense" account…

The only time I've ever seen source and sink used is in electronics. You may as well call it squeem and flurb, source and sink isn't helping anyone.

Re: Double-entry bookkeeping as a directed graph

#144

Post by inopinatus »

btbuildem wrote: post #34

I think I'm missing something here. How does looking at transaction history as a directed graph help anything? Is it an improvement on the centuries-old "double-entry" practice? It seems to barely work with the toy example of couple transactions - imagine what the graph would look like with dozens or hundreds of edges between pairs of nodes. What use would there be for the typical algorithms that work with graphs? Th…

It’s hare-brained. The article is over-egging the pudding. They haven’t established a justification, and the author’s claim that this visualisation helped them arrive at a clearer understanding is rather undermined by the category errors they make in the course of trying to geeksplain D.E. from first principles. What’s more they’ve represented only one very simple transaction. God knows how they’re going to gain from a graph-based visualisation of something more abstract e.g. dissimilar tax and book depreciation, adjustments for gains/losses on foreign exchange, allocation of franked dividends, PAYG, holding of amounts in trust for other parties, partial recognition of deferred revenue and so forth.

Re: Double-entry bookkeeping as a directed graph

#145

Post by abtinf »

rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account

I find it easy to just think of debit as adding to the left and credit as adding to the right. Their definitions are always the same that way.

Re: Double-entry bookkeeping as a directed graph

#146

Post by mikeyouse »

EvanAnderson wrote: post #132
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

The accounting equation is the right thing to think about. People want debit and credit to mean something more than they need to. My 100-level accounting instructor said it pretty succinctly: Debit means an entry in the left column. Credit means an entry in the right column. What a transaction means for the business depends on the accounts.

Right - the words themselves aren't as important as the concept. Any replacement word will suffer the same confusion. There's a reason that the language of debits and credits has largely remained the same for the past thousand years, and the language describing accounting is unlikely to be 'optimized' by first-principles CS concepts from people only loosely familiar with the field.

Re: Double-entry bookkeeping as a directed graph

#147

Post by lisper »

abtinf wrote: post #145
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account I find it easy to just think of debit as adding to the left and credit as adding to the right. Their definitions are always the same that way.

But that just begs the question because you have to remember the arbitrary assignments of what things go on the left and what things go on the right.

Re: Double-entry bookkeeping as a directed graph

#148

Post by fauigerzigerk »

EvanAnderson wrote: post #132
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

The accounting equation is the right thing to think about. People want debit and credit to mean something more than they need to. My 100-level accounting instructor said it pretty succinctly: Debit means an entry in the left column. Credit means an entry in the right column. What a transaction means for the business depends on the accounts.

And what if there are no columns? Google "journal entries for X" and you're going to find something like this:

  Dr accountX £100
  Cr accountY £90
  Cr accountZ £10
Left and right was fine when T accounts were universally used to record entries, but that's no longer the case.

Re: Double-entry bookkeeping as a directed graph

#149

Post by lisper »

EvanAnderson wrote: post #132
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

The accounting equation is the right thing to think about. People want debit and credit to mean something more than they need to. My 100-level accounting instructor said it pretty succinctly: Debit means an entry in the left column. Credit means an entry in the right column. What a transaction means for the business depends on the accounts.

> Debit means an entry in the left column. Credit means an entry in the right column

But that just shifts the arbitrariness of the whole thing from the words "debit" and "credit" to the words "left" and "right".

Re: Double-entry bookkeeping as a directed graph

#150

Post by abtinf »

jandrese wrote: post #108
rjinman wrote: post #104

Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology. Essentially, the goal is to keep the accounting equation true at all times. The equation is: Equity = Assets - Liabilities. Eventually, earnings (Income - Expenses) will become part of equity, so splitting that out, you have: Equity + Income - Expenses = Assets - Liabilities. Rearranging to get rid of t…

The one thing I remember most from my economics courses in college is that economists have highly idiosyncratic mathematical conventions and they don't care. So many graphs with the independent variable on the Y axis...

> So many graphs with the independent variable on the Y axis

I was perplexed by this as well and none of my profs could cogently explain it. The classic example are supply and demand curves, with price as the Y axis.

I finally realized they are actually trying to communicate that price is not under the control of the buyer or seller, but that the market dictates the price given a level of production. This kind of “spherical cow” thinking made me develop a healthy contempt for conventional economics.

Post reply on HN