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Accounting for Computer Scientists (2011)

martin.kleppmann.com

71–76 of 76 posts

Re: Accounting for Computer Scientists (2011)

#71

Earlier quoted context omitted.

The crypto model of single entries with "from" and "to" field works well for transactions. For example you move $100 from checking to savings account, something like the following will capture it perfectly. ```json { "from": "Checking", "to": "Savings", "amount": 100 } ``` This is basically what a crypto ledger does. But the main reason why we need double entry accounting is that not all accounting entries are transf…

But you don't need double entry to register increases or decreases of value; you could as well just use single-entry accounting and add or remove money from a single account, using transactions that are not transfers. In the past this was problematic because you missed error-checking by redundance, but nowadays you can trust a computer to do all the checking with database transactions (which are more complex checks t…

I think this depends on what you consider to be the fundamental trait of double-entry accounting: the error-checking or the explanatory power.

It is true that by enforcing that value movement have both a source and a target, we make it possible to add a useful checksum to the system. But I believe this is a side benefit to the more fundamental trait of requiring all value flow to record both sides, in order to capture the cause for each effect.

I agree with your general perspective though: technology has afforded us new and different tools, and thus we should be open to new data models for accounting. I don't agree with other commenters that we should tread lightly in trying to decipher another field, nor do I agree with the view that the field of Accounting would have found a better way by now if there were one. Accountants are rarely, if ever, experts in CS or software engineering; likewise software developers rarely have depth in accounting.

Source: just my opinions. I've been running an accounting software startup for 5 years.

Re: Accounting for Computer Scientists (2011)

#72
Accounting is just learning tax breaks, loopholes, and evasion. This article is weirdly written, as it claims accounting is just graph theory, and then provides the most convoluted way of calculating basic things like profit and loss. I recommend not reading this article at all.

Re: Accounting for Computer Scientists (2011)

#73

Earlier quoted context omitted.

It's like Newton's third law of motion, that "every force has an equal and opposite reaction", which when I was a wee child made no sense to me because "surely then nothing would happen". The key was that the equal and opposite reactions are on different objects. It's the same thing with double entry accounting! The two entries are on different accounts.

> which when I was a wee child made no sense to me because "surely then nothing would happen" I've literally just had this conversation today about jet aircraft with my 5-year-old, and how when you push air out of the jet engine really fast, that action pushes the nozzle forwards - it's not pushing against anything, it's like if you push against the sides of a box. But he's still not quite got it, so we're going to g…

> so we're going to go to the workshop and play with a high-volume fire pump.

Sounds like a joke. Had me laughing. (I would not let a 5 y/o play with a fire pump!)

Re: Accounting for Computer Scientists (2011)

#74
post #31

Earlier quoted context omitted.

We wrote about it here: https://finbodhi.com/docs/understanding-double-entry It's just a convention to be able to capture the flow of money. Roughly, money comes in via Income, stays in Asset, goes to Expense (there is also Liability and Equity). Let's consider a home, as an asset. You could have got it with your own money (`Asset:Bank -> Asset:House`), or by taking a loan (`Liability:Home Loan -> Asset:House`). Both…

Hi, your compound interest article on ciju.in was good. Any way to contact you to talk?

you can email me at ping@ciju.in, we can setup a call via email.

Re: Accounting for Computer Scientists (2011)

#75

Earlier quoted context omitted.

> which when I was a wee child made no sense to me because "surely then nothing would happen" I've literally just had this conversation today about jet aircraft with my 5-year-old, and how when you push air out of the jet engine really fast, that action pushes the nozzle forwards - it's not pushing against anything, it's like if you push against the sides of a box. But he's still not quite got it, so we're going to g…

> so we're going to go to the workshop and play with a high-volume fire pump. Sounds like a joke. Had me laughing. (I would not let a 5 y/o play with a fire pump!)

We let firefighters play with them, and they're basically 5-year-olds with access to powerful hydraulic cutting equipment.

I love them all really.

Re: Accounting for Computer Scientists (2011)

#76
post #50

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 "double entry" stems from the fundamental accounting equation: assets = liabilities + equity. Whatever you have is either yours or borrowed. Change in one must have an equal change in the other to keep the equation balanced, otherwise you would lose track of how much you own and how much you owe. For example, you have £200 in cash. £100 was your own earnings, £100 your mum gave you to pass on to someone. In pure…

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