From d76a226fe918737ac3c0f8a7e8b0583daa32d577 Mon Sep 17 00:00:00 2001 From: Simon Michael Date: Thu, 11 Apr 2024 10:08:29 -1000 Subject: [PATCH] faq: updates --- src/FAQ.md | 25 +++++++++++++++++++------ 1 file changed, 19 insertions(+), 6 deletions(-) diff --git a/src/FAQ.md b/src/FAQ.md index 533b3a9..48c8a4d 100644 --- a/src/FAQ.md +++ b/src/FAQ.md @@ -119,23 +119,36 @@ Practically speaking, in personal accounting you'll never use equity except - when setting up starting balances in a new file - when converting between currencies (optional, if you want to be [really correct](https://hledger.org/dev/hledger.html#equity-conversion-postings)) -### Where are debits and credits ? Why do some balances look negative ? +### Where are debits and credits ? Many plain text accounting tools use **signed numbers** in place of the traditional terms **debit** and **credit**. -Of course the credits and debits are still there; in this system, whenever you see a negative amount being posted in an account, it is a credit, and when you see a positive amount posted, it is a debit. -Newcomers to accounting find this much more intuitive and easier to learn. (Some experienced accountants find otherwise.) -Because of this convention, many PTA apps and examples show equity, liability, and revenue account balances as negative numbers. +Of course the debits and credits are still there. +But with this convention, +when you see a positive amount being posted in an account, it is a debit, +and when you see a negative amount posted, it is a credit. + +(Or possibly a contra-debit or contra-credit respectively. "Contra" means "opposite to the normal direction".) + +(Be warned of the usual pitfall that banks and businesses use "debit" and "credit" from their point of view, ie reversed, when communicating with customers.) + +Newcomers to accounting find signed numbers much more intuitive and easier to learn than debit/credit terminology, +partly because they have less historical and didactic baggage. +(Some experienced accountants find otherwise.) + +### Why do some balances look negative ? + +Because of the signed number convention, many PTA apps and examples show Equity, Liability, and Revenue account balances as negative numbers. You can get used to reading these signed-number reports in a day or two. Just remember: when equity increases (more wealth!) or liability increases (more debt!) or revenue increases (more income!), their balance is shown as a larger negative number (more negative). Some PTA tools allow flipping the minus signs, or showing traditional debit and credit terminology instead of signed numbers. -More discussion: +More: -- [reddit: Is there any plain text accounting software which uses standard debits and credits?](https://www.reddit.com/r/plaintextaccounting/comments/18sbmsx/is_there_any_plain_text_accounting_software_which/) - [hledger FAQ: Why are my revenue (income), liability, and equity balances negative ?](https://hledger.org/faq.html#why-are-my-revenue-income-liability-and-equity-balances-negative-) +- [reddit: Is there any plain text accounting software which uses standard debits and credits?](https://www.reddit.com/r/plaintextaccounting/comments/18sbmsx/is_there_any_plain_text_accounting_software_which/) - [Hacker News: Double-entry bookkeeping as a directed graph](https://news.ycombinator.com/item?id=39988993) ### Which kind of account are loans ?