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Accounting For Developers, Part I

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Re: Accounting For Developers, Part I

#61

Post by marcosdumay »

EvanAnderson wrote: post #25

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…

Yep, you debit or credit an specific account, and to make things extra confusing, a debit on one account is always the same as a credit on a different account (and the other way around).

Somehow transaction intermediaries made some incredible bullshity product differentiation out of those words... and what makes everything worse is that, since they are intermediaries, every transaction is both a debit and a credit on their own accounting.

Re: Accounting For Developers, Part I

#62

Post by tepitoperrito »

rahimnathwani wrote: post #56
EvanAnderson wrote: post #25

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. I think of it as 'owing' (liability) or 'owning' (asset). 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 shareholde…

I think (would love to know if I'm wrong) of it as: debit => from, credit => to

Re: Accounting For Developers, Part I

#63

Post by rahimnathwani »

sudhirj wrote: post #58

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…

Maintenance invoice issued:

  DR accounts receivable
  CR income
Maintenance paid

  DR bank account
  CR accounts receivable
Each apartment is part of accounts receivable.

Normally accounts receivable has a DR balance (because apartment owners pay you AFTER you invoice them, so they are usually DEBTors).

Re: Accounting For Developers, Part I

#64

Post by andruby »

sudhirj wrote: post #58

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…

If you're serious about building a SaaS tool (and I encourage it!), make sure to find someone with an accounting background to help you / advise you. Maybe they can be a good co-founder.

(I've been working on a SaaS in the accountancy space for 6 years and our two co-founders are an accountant and a software engineer. It's a good match)

Re: Accounting For Developers, Part I

#65

Post by sudhirj »

rahimnathwani wrote: post #63
sudhirj wrote: post #58

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…

Maintenance invoice issued: DR accounts receivable CR income Maintenance paid DR bank account CR accounts receivable Each apartment is part of accounts receivable. Normally accounts receivable has a DR balance (because apartment owners pay you AFTER you invoice them, so they are usually DEBTors).

> Each apartment is part of accounts receivable.

Like a sub-account? This is probably the mindfuck part. So every apartment owner who opens up their statement is seeing a filtered balance?

Re: Accounting For Developers, Part I

#66

Post by sudhirj »

epa wrote: post #59
sudhirj wrote: post #58

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…

Assets are +, Liabilities are -. So a receivable is an asset and +100 is correct. when the money comes in, you need to +100 cash and -100 receivable.

So when an apartment pays, is 4 entries in the single transaction? Credit their apartment account, debit the bank account, credit cash and debit receivables? Never thought of making 4 entries for a single transaction.

Re: Accounting For Developers, Part I

#67

Post by lhuser123 »

tepitoperrito wrote: post #62
rahimnathwani wrote: post #56

Earlier quoted context omitted.

> "debit" and "credit" and > think they have to do with > "owing" or "being owed" money. I think of it as 'owing' (liability) or 'owning' (asset). 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 shareholde…

I think (would love to know if I'm wrong) of it as: debit => from, credit => to

It depends. You really need the context.

Re: Accounting For Developers, Part I

#68

Post by sudhirj »

andruby wrote: post #64
sudhirj wrote: post #58

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…

If you're serious about building a SaaS tool (and I encourage it!), make sure to find someone with an accounting background to help you / advise you. Maybe they can be a good co-founder. (I've been working on a SaaS in the accountancy space for 6 years and our two co-founders are an accountant and a software engineer. It's a good match)

This is currently just a side project, but yeah, if I have more than 10 buildings using it I'll probably take it seriously and bring in an (accountant cofounder).

Re: Accounting For Developers, Part I

#69

Post by rahimnathwani »

tepitoperrito wrote: post #62
rahimnathwani wrote: post #56

Earlier quoted context omitted.

> "debit" and "credit" and > think they have to do with > "owing" or "being owed" money. I think of it as 'owing' (liability) or 'owning' (asset). 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 shareholde…

I think (would love to know if I'm wrong) of it as: debit => from, credit => to

I don't understand what you mean well enough. So you might be right or you might be wrong :)

Can you share a couple of example (or maybe use the same examples I did)?

Re: Accounting For Developers, Part I

#70

Post by EvanAnderson »

rahimnathwani wrote: post #56
EvanAnderson wrote: post #25

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. I think of it as 'owing' (liability) or 'owning' (asset). 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 shareholde…

> > Without the context of the specific accounts being debited or credited the terms themselves mean nothing."

> This seems incorrect to me.

You can't derive the change in assests, liabilities, or equity without know which accounts are being debited and credited. The terms "debit" and "credit" themselves don't tell you anything by themselves. Without the context of accounts the terms are meaningless. I think programmers get hung-up on thinking that they have meaning in isolation (i.e. thinking that "a debit means somebody owes us money").

> I think of it as 'owing' (liability) or 'owning' (asset).

> When you credit an account, you either increase what you 'owe' on that account OR decrease what you 'own' on that account.

That's my point. When you know they type of account being debited or credited you can reason about how it affects the balance of the account and the managerial context of the transaction (i.e. "somebody owes us money because the debit was to a receivable account").

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