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Accounting for Computer Scientists (2011)

martin.kleppmann.com

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Re: Accounting for Computer Scientists (2011)

#11

Post by throwaway74848 »

NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

Accounting generally wouldn't depict it this way, and it's quite confusing with the bubble diagram. I always found it easier when looking at things called "t accounts" [1]

Anyway, for the example you mention, it's supposed to mean that it takes 5k from the bubble on the left (founder) and gives to next bubble (bank)

Then each line again takes from left and gives to the new bubble on right. So each line is a transaction that balances out by adjusting both sides.

[1] https://en.wikipedia.org/wiki/Debits_and_credits

Re: Accounting for Computer Scientists (2011)

#13

Post by V__ »

NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

Every time it comes up in my life, I search for an easy answer, yet I haven't found one yet. It reduces errors, makes it easy to track things and other reasons... all don't make sense to me if there is no physical bookkeeping involved. I am nearly convinced the reason is simply: It has been done like that for centuries. That's it.

Re: Accounting for Computer Scientists (2011)

#14

Post by NikolaNovak »

throwaway74848 wrote: post #11
NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

Accounting generally wouldn't depict it this way, and it's quite confusing with the bubble diagram. I always found it easier when looking at things called "t accounts" [1] Anyway, for the example you mention, it's supposed to mean that it takes 5k from the bubble on the left (founder) and gives to next bubble (bank) Then each line again takes from left and gives to the new bubble on right. So each line is a transacti…

Thanks, I appreciate your answer, though sadly it does not move the needle much for me.

* the article still loses me because it defines transactions one way (the edges) and then seems to make this big switch that each edge/transaction is really two transactions suddenly (one on each side of the edge) .

Similarly the explanation In Wikipedia is completely contrary to my mental framework: "tenant who writes a rent cheque to a landlord would enter a credit for the bank account on which the cheque is drawn, and a debit in a rent expense account. Similarly, the landlord would enter a credit in the rent income account associated with the tenant and a debit for the bank account where the cheque is deposited."

I cannot even begin to parse that, and I'm honestly reasonably bright :-). Paying my landlord is "obviously" a transaction from my banking account (negative) into their banking account (positive). How it becomes four transaction is, as ever, the magic bit glossed over. That landlord is entering "debit for the bank account where the cheque is deposited" just feels like someone is yanking my chain.

Anyvoo! Like with French language, I'll try again one day :-). Merci!

Re: Accounting for Computer Scientists (2011)

#15

Post by adamcharnock »

NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

I wrote this a long time ago. It does tend to upset some people, but it did work as an accurate and testable mental model:

https://django-hordak.readthedocs.io/en/latest/accounting-fo...

Re: Accounting for Computer Scientists (2011)

#16

Post by jeremysalwen »

NikolaNovak wrote: post #14
throwaway74848 wrote: post #11

Earlier quoted context omitted.

Accounting generally wouldn't depict it this way, and it's quite confusing with the bubble diagram. I always found it easier when looking at things called "t accounts" [1] Anyway, for the example you mention, it's supposed to mean that it takes 5k from the bubble on the left (founder) and gives to next bubble (bank) Then each line again takes from left and gives to the new bubble on right. So each line is a transacti…

Thanks, I appreciate your answer, though sadly it does not move the needle much for me. * the article still loses me because it defines transactions one way (the edges) and then seems to make this big switch that each edge/transaction is really two transactions suddenly (one on each side of the edge) . Similarly the explanation In Wikipedia is completely contrary to my mental framework: "tenant who writes a rent cheq…

Double entry book keeping is just recording the "edge" in two places, once based on the source node, and once based on the target node. So you have a nice list of all edges coming from each node and a nice list of all edges going to each node. This was important before computers, since the process of looking up all edges going to/from a node would take real time and effort.

For your example of the landlord and the tenant, think, what if the landlord wanted a list of all payments that went into a specific bank account, what if the tenant wanted a list of all rent payments, etc. It's basically a database index to speed up those queries, but for a written database that is updates by hand. The fact that there is redundancy is just a bonus because you can now notice if the two places a piece of information are written down don't match.

Re: Accounting for Computer Scientists (2011)

#17

Post by Havoc »

NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

>I never understood double entry bookkeeping

It only makes sense in the context of a company. Yes you can shoehorn it into a personal context and/or treating it like some sort of database like hn's accounting posts love to do but that's not what the real accounting world looks like at all.

An accountant armed with a low/no code solution isn't going to write great code. That I think is obvious to every hn reader. But somehow hn gang think they'll reinvent a system that has been in place for 100s of years because it's backed by a different DB tech that's better suited to double entry.

I know a decent bit of both worlds so that disconnect in perceptions always amuses me.

[As a side note I don't think the average tech guy gains much from learning "accounting". Even that is a complete misunderstanding of what it is. Unless you're dealing with cap tables and corporate structuring you're better off doubling down on personal finances & taxes and risk management...not double entry]

edit: yes am accountant, yes can code..rust and python mostly, not amazing at either

Re: Accounting for Computer Scientists (2011)

#18

Post by bc569a80a344f9c »

NikolaNovak wrote: post #9

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negati…

> The previous diagram absolutely does not have positive and negative for each transaction!

But it does. The $500 transaction for furniture is an edge from the bank to the furniture asset account. This edge is outgoing from the bank account (-$500) and incoming to the furniture asset account (+$500). That’s it, that’s double entry bookkeeping. Each edge represents both entries.

Re: Accounting for Computer Scientists (2011)

#19

Post by bc569a80a344f9c »

jeremysalwen wrote: post #16
NikolaNovak wrote: post #14

Earlier quoted context omitted.

Thanks, I appreciate your answer, though sadly it does not move the needle much for me. * the article still loses me because it defines transactions one way (the edges) and then seems to make this big switch that each edge/transaction is really two transactions suddenly (one on each side of the edge) . Similarly the explanation In Wikipedia is completely contrary to my mental framework: "tenant who writes a rent cheq…

Double entry book keeping is just recording the "edge" in two places, once based on the source node, and once based on the target node. So you have a nice list of all edges coming from each node and a nice list of all edges going to each node. This was important before computers, since the process of looking up all edges going to/from a node would take real time and effort. For your example of the landlord and the te…

That’s a great way of explaining why this was historically done.

Re: Accounting for Computer Scientists (2011)

#20

Post by [deleted] »

NikolaNovak wrote: post #14
throwaway74848 wrote: post #11

Earlier quoted context omitted.

Accounting generally wouldn't depict it this way, and it's quite confusing with the bubble diagram. I always found it easier when looking at things called "t accounts" [1] Anyway, for the example you mention, it's supposed to mean that it takes 5k from the bubble on the left (founder) and gives to next bubble (bank) Then each line again takes from left and gives to the new bubble on right. So each line is a transacti…

Thanks, I appreciate your answer, though sadly it does not move the needle much for me. * the article still loses me because it defines transactions one way (the edges) and then seems to make this big switch that each edge/transaction is really two transactions suddenly (one on each side of the edge) . Similarly the explanation In Wikipedia is completely contrary to my mental framework: "tenant who writes a rent cheq…

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