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It doesn’t quite. You’ll also need to consider allocations and accounting for tax (sales and income), depreciation, transaction fees, warehousing, shipping reve

It doesn’t quite. You’ll also need to consider allocations and accounting for tax (sales and income), depreciation, transaction fees, warehousing, shipping revenue and expenses, revenue and expense recognition, discounts, returns, overpayments, prepayments, futures, chargebacks, refunds, credit notes, invoicing, subscriptions, subsidies, tariffs, reconciliation, adjustments in the current financial year, adjustments for already reported periods, gains & losses on foreign exchange, and subledger roll-up for your parent fruit company’s GL. You’ll need to maintain consistency and coherence in multiple combinations of the above, and when the auditors show up, be able to show unequivocally that you understood every edge case when recording and reporting transactions, especially the ones that crossed a financial year boundary. Accounting software mechanises all this. It is not simple.

buyx 6y ago
I specifically stated it was an unsophisticated example. GP wanted to know what happens with the "simplest transaction" when he buys a banana.
- tgb 6y ago
  Yeah, exactly. The first or second example in any explanation should be buying a banana that you immediately eat. That way the reader sees that an "account" doesn't have to be a bank account nor even a collection of physical goods that exist, it's just a virtual bucket made to keep track of certain transactions. Until I figured that out, double-entry made no sense at all. This is all exacerbated by the common "Assets = Liabilities + Equity" equation which hides expenses entirely. All of this is, of course, a problem about pedagogy in the quick guides found all over the internet. (Including the one linked to here, though the second example is at least an expense but not in the way that would enlighten a beginner.)
- inopinatus 6y ago
  That was the simplified version.
Krustopolis 6y ago
Apples and oranges. By way of analogy, the OP was talking about C while you are describing building a commercial Windows app. DE accounting is a simple tool that can be used in complex ways.
- inopinatus 6y ago
  OP is neither, it is in Python, but this merely demonstrates that accounting can be incorrect in any language. The problem isn't just terminology, but when people use the term double-entry accounting interchangeably with double-entry book-keeping, they reveal how little they know about the subject matter, and how unqualified they are to be implementing either.

buyx 6y ago

I specifically stated it was an unsophisticated example. GP wanted to know what happens with the "simplest transaction" when he buys a banana.

tgb 6y ago
Yeah, exactly. The first or second example in any explanation should be buying a banana that you immediately eat. That way the reader sees that an "account" doesn't have to be a bank account nor even a collection of physical goods that exist, it's just a virtual bucket made to keep track of certain transactions. Until I figured that out, double-entry made no sense at all. This is all exacerbated by the common "Assets = Liabilities + Equity" equation which hides expenses entirely. All of this is, of course, a problem about pedagogy in the quick guides found all over the internet. (Including the one linked to here, though the second example is at least an expense but not in the way that would enlighten a beginner.)
inopinatus 6y ago
That was the simplified version.

Krustopolis 6y ago

Apples and oranges. By way of analogy, the OP was talking about C while you are describing building a commercial Windows app. DE accounting is a simple tool that can be used in complex ways.

inopinatus 6y ago
OP is neither, it is in Python, but this merely demonstrates that accounting can be incorrect in any language. The problem isn't just terminology, but when people use the term double-entry accounting interchangeably with double-entry book-keeping, they reveal how little they know about the subject matter, and how unqualified they are to be implementing either.