51–60 of 193 posts
> A credit entry will always increase the balance of a credit normal account and decrease the balance of a debit normal account. Put differently: Not sure if the author is reading comments here, but the diagram after this sentence shows the opposite!
Reading: https://docs.google.com/document/d/1imIgNckZ_kM564fpGgTBtsqi...
1hr Youtube workshop: https://www.youtube.com/watch?v=Lelq40jILA4
2hr Audio podcast discussion: https://share.transistor.fm/s/0b9270a5
to make a point directly related to this post - i believe accounting is the starting point for finance - but you can learn "just enough" accounting to make it work.
Any time the idea of double entry bookkeeping comes up there is nothing but unanimous advocacy for it. This thread echoes the same sentiment where there's several comments about the importance of double entry. And yet like all previous endorsements I've heard, I've not been able to take away why it is so important. The reasons are always around error tracking, tracing source of funds, standing the test of time etc. a…
The name "double-entry bookkeeping" may be misleading: what matters is not how many times / in how many places you do entry , but whether you're tracking both (or all) sides of a transaction. (With a computer you only need to enter the transaction once, as long as you track the "from"/"to".) A couple of examples from personal money-tracking: • say you have a bank account, and you track when the bank balance increases…
> A credit entry will always increase the balance of a credit normal account and decrease the balance of a debit normal account. Put differently: Not sure if the author is reading comments here, but the diagram after this sentence shows the opposite!
Sometimes non-accounting people get hung-up on the words "debit" and "credit" and think they have to do with "owing" or "being owed" money. The effect of a debit or credit on the business depends on the accounts in the transaction and debit and credit don't have anything to do with the "direction" of a flow of money. My 100-level accounting instructor summarized it as: "A debit is the entry in the left column, and a…
> "debit" and "credit" and
> think they have to do with
> "owing" or "being owed" money.
When you credit an account, you either increase what you 'owe' on that account OR decrease what you 'own' on that account.
Examples:
- bank credits a customer account => bank owes more to its customers
- company credits income account => company owes more to its shareholders
- company credits accounts receivable => company owns less in unpaid invoices
> Without the context of the
> specific accounts being debited
> or credited the terms
> themselves mean nothing.
> A debit is the entry in the left
> column, and a credit is an
> entry in the right column.
I think the figure / chart in "Effect on balance by account type" is wrong / flipped. It says that debits decrease debit normal account balance which doesn't match the text description or subsequent examples.
So obviously I'm building a SaaS that will handle all the accounts for every HOA in the whole world and become a trillion dollar product. But I need to figure out which accounts are debit normal and credit normal and how transactions should flow first.
So far I have the following accounts:
* Per-apartment accounts, like the account for Apt#A1, Apt#A2, Apt#B1 etc.
* A Maintenance Receivable account - the account for maintenance payments that should have come in.
* A actual current operating account - account that reflects the building's bank account, showing money that came in from apartments for maintenance payments and also expenses.
* An Expenses account. For expenses.
So far the typical transactions I can think of are:
* Beginning of every month the maintenance is due (say 100), so each apartment gets a -100 with a corresponding +100 on Maintenance Receivable.
* When an apartment pays, they get a +100, but this is money that actually lands in the current operating bank account, so that's a +100 too? I'm guessing this is where the genius of not using plus or minus but using debit and credit comes in. That avoids the confusion, one is a debit and one is a credit, but which is which and which is a debit normal and credit normal account?
* When there's an expense, I remove money from the bank account account and put it in the expenses account.
Seems sort of ok, but the Maintenance receivable account is always increasing. How do I set this up so I can correctly represent what an apartment owes while also capturing what it paid as inputs to the buildin's bank account?
Can someone help with a few ideas on this topic? I've been volunteered to be the treasurer at my building home owner's association, and trying to keep accounts for the whole building on a single excel sheet is a shitshow. So obviously I'm building a SaaS that will handle all the accounts for every HOA in the whole world and become a trillion dollar product. But I need to figure out which accounts are debit normal and…
Sometimes non-accounting people get hung-up on the words "debit" and "credit" and think they have to do with "owing" or "being owed" money. The effect of a debit or credit on the business depends on the accounts in the transaction and debit and credit don't have anything to do with the "direction" of a flow of money. My 100-level accounting instructor summarized it as: "A debit is the entry in the left column, and a…
I was lucky enough to work on a billing system early in my career and pick up some rudimentary knowledge of accounting. I can confirm that even being able to 'speak the language' a little bit provides immense value to you as a developer.
It's kind of like being given a cheat code.