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re: debits and credits Sometimes non-accounting people get hung-up on the words "debit" and "credit" and think they have to do with "owing" or "being owed" mon

re: debits and credits 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, being "positive" or "negative", etc. 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 credit is an entry in the right column." Without the context of the specific accounts being debited or credited the terms themselves don't confer significant meaning. A basic knowledge of bookkeeping and accounting terminology can confer near "super powers" when it comes to dealing with finance people. It's easy to learn and worth the time. Double-entry bookkeeping is one of the oldest and longest-practiced "IT" disciplines. Your work probably touches revenue / expenses for your employer and someday you'll need to interface with accounting or finance people. Being able to speak the language, even poorly, has helped me gain trust and credibility that I don't believe speaking only in IT terms would have.

beej71 3y ago
Ledger kind of side steps this "debit" and "credit" issue by just using positive and negative numbers to add to or subtract from a particular account. If you get paid $1000, your Income account gets -1000 and your Checking account gets +1000.
- faustlast 3y ago
  Well, income getting the negative number only makes sense if you know that it is a credit account that increases with credit.
  - beej71 3y ago
    In the case of Ledger, it also makes sense because -1000 + 1000 = 0.
- lrasinen 3y ago
  I do wish accounting practice would finally accept the mathematical advancements of the last 500 years and start using negative numbers. Combined with the "transactions sum to zero" rule it makes things blindingly obvious. Background: I studied the basics of accounting on 8th and 9th grade, and acted as a treasurer or auditor in some university student associations. I accepted the traditional presentation as a given; "it'll make sense in the end". Then I learned the negative number thing and the sums-to-zero concept and suddenly it was completely clear what was happening. Ledger manual's "Principles of Accounting with Ledger" was where this finally kicked in. https://ledger-cli.org/doc/ledger3.html#Principles-of-Accounting-with-Ledger https://ledger-cli.org/doc/ledger3.html#Principles-of-Accoun...
- simonmic 3y ago
  Right. From a recent https://fosstodon.org/tags/plaintextaccounting https://fosstodon.org/tags/plaintextaccounting thread: PTA sign convention makes it very straightforward: If the posting amount is negative it's a credit If the posting amount is positive it's a debit. I use this mnemonic: debit / to / plus / left / short words credit / from / minus / right / longer words

beej71 3y ago

Ledger kind of side steps this "debit" and "credit" issue by just using positive and negative numbers to add to or subtract from a particular account. If you get paid $1000, your Income account gets -1000 and your Checking account gets +1000.

faustlast 3y ago
Well, income getting the negative number only makes sense if you know that it is a credit account that increases with credit.
- beej71 3y ago
  In the case of Ledger, it also makes sense because -1000 + 1000 = 0.
lrasinen 3y ago
I do wish accounting practice would finally accept the mathematical advancements of the last 500 years and start using negative numbers. Combined with the "transactions sum to zero" rule it makes things blindingly obvious. Background: I studied the basics of accounting on 8th and 9th grade, and acted as a treasurer or auditor in some university student associations. I accepted the traditional presentation as a given; "it'll make sense in the end". Then I learned the negative number thing and the sums-to-zero concept and suddenly it was completely clear what was happening. Ledger manual's "Principles of Accounting with Ledger" was where this finally kicked in. https://ledger-cli.org/doc/ledger3.html#Principles-of-Accounting-with-Ledger https://ledger-cli.org/doc/ledger3.html#Principles-of-Accoun...
simonmic 3y ago
Right. From a recent https://fosstodon.org/tags/plaintextaccounting https://fosstodon.org/tags/plaintextaccounting thread: PTA sign convention makes it very straightforward: If the posting amount is negative it's a credit If the posting amount is positive it's a debit. I use this mnemonic: debit / to / plus / left / short words credit / from / minus / right / longer words