4 ms·

Even bullet 4 has assets and expenses multiplied by -1. Completely .... wrong. Maybe this might work for a bank where assets and liabilities are sort of flipp

by akgoel 6y ago

Even bullet 4 has assets and expenses multiplied by -1. Completely .... wrong. Maybe this might work for a bank where assets and liabilities are sort of flipped from a non-bank business?

sago 6y ago
I agree. Except I think you're being generous :) It would not work for a bank. The only reason they 'sort of flip' is that they give your account from their perspective. Your statement is a slice of their accounting.
patmcc 6y ago
Banks and non-banks don't treat assets/liabilities in different ways in accounting - banks just engage in transactions most other businesses don't, as a normal matter of business. For example - if you're holding someone's money for them, that's a liability - you have to pay it back some time. If someone owes you money, that's an asset - it's worth something. Banks use the cash from liabilities (people's savings accounts) to pay for assets (mortgages) and make money on the spread.
- navaati 6y ago
  Except Fractionnal Reserve. It kinda throws off the idea, how do they do then ? Let's see, when they lend money they don't have (which is what it is) they increase the number on your account, that is they create a big liability for themselve. On the other hand they create an asset wich is your debt to them. So accounting-wise, it works out, like theorically I could do that (lending) even if I have €0, it's all paper. But then you're gonna go and empty that account to buy your house, reducing their liability and taking (reducing) their cash instead... that they don't have ! So how does it work ? Does it just work because you don't actually buy houses with bills and coins but with bank transfers, then just shifting the paper magic to another bank ? To be honest I know they can do something my broke self can't, and it has to du with central banks, but what is it exactly ? Something like "if everybody happens to empty their account to cash at the same time, don't worry mate we'll print them bills and give them to you, pinky promise" ?
inopinatus 6y ago
They’re not flipped. From a bank’s point of view, any money they hold on your behalf is a liability. Your bank statement is an extract from their books. When they take a fee, it’s a debit on your statement, because it’s a credit to revenue on theirs.

by akgoel 6y ago

Even bullet 4 has assets and expenses multiplied by -1. Completely .... wrong. Maybe this might work for a bank where assets and liabilities are sort of flipped from a non-bank business?

sago 6y ago

I agree. Except I think you're being generous :) It would not work for a bank. The only reason they 'sort of flip' is that they give your account from their perspective. Your statement is a slice of their accounting.

patmcc 6y ago

Banks and non-banks don't treat assets/liabilities in different ways in accounting - banks just engage in transactions most other businesses don't, as a normal matter of business. For example - if you're holding someone's money for them, that's a liability - you have to pay it back some time. If someone owes you money, that's an asset - it's worth something. Banks use the cash from liabilities (people's savings accounts) to pay for assets (mortgages) and make money on the spread.

navaati 6y ago
Except Fractionnal Reserve. It kinda throws off the idea, how do they do then ? Let's see, when they lend money they don't have (which is what it is) they increase the number on your account, that is they create a big liability for themselve. On the other hand they create an asset wich is your debt to them. So accounting-wise, it works out, like theorically I could do that (lending) even if I have €0, it's all paper. But then you're gonna go and empty that account to buy your house, reducing their liability and taking (reducing) their cash instead... that they don't have ! So how does it work ? Does it just work because you don't actually buy houses with bills and coins but with bank transfers, then just shifting the paper magic to another bank ? To be honest I know they can do something my broke self can't, and it has to du with central banks, but what is it exactly ? Something like "if everybody happens to empty their account to cash at the same time, don't worry mate we'll print them bills and give them to you, pinky promise" ?

inopinatus 6y ago

They’re not flipped. From a bank’s point of view, any money they hold on your behalf is a liability. Your bank statement is an extract from their books. When they take a fee, it’s a debit on your statement, because it’s a credit to revenue on theirs.