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Then this would be one of those cases where working around a problem (the lack of negative numbers) actually resulted in a superior product. You don't want nega

by jjeaff 3y ago

Then this would be one of those cases where working around a problem (the lack of negative numbers) actually resulted in a superior product. You don't want negative numbers because that would require the description of a category to change based on whether it is positive or negative. You wouldn't want to be changing "Assets" to "Liabilities" every time the number goes below zero. You don't need negatives in accounting, because anything that is affecting a number differently than the rest (reducing rather than increasing), needs to be accounted for separately. Imagine showing negative revenue. That would be mostly useless. You want to see how much revenue you had, and in a separate entry, how many expenses. Imagine how misleading it could be to show $0 in expenses last month, when in reality, you had $100 in expenses, but you subtracted $100 out because you returned some big purchase from last month and got a refund.

ebolyen 3y ago
> You don't want negative numbers because that would require the description of a category to change based on whether it is positive or negative That's actually already how it works, the kind of inverse you use depends on if the account is credit-normal or debit-normal. You end up in the same place. > Imagine showing negative revenue. That would be mostly useless. Revenue is already credit instead of debit, which if you were consistent in using negative numbers, a negative revenue be completely correct (so you would want to sweat if revenue was a positive number). It's weird, but it lets your cash on hand be a positive number, which is just a necessary consequence of the system. > Imagine how misleading it could be to show $0 in expenses last month, when in reality, you had $100 in expenses, but you subtracted $100 out because you returned some big purchase from last month and got a refund. Wouldn't that be accurate? This would be a debit of 100 and a credit of 100 which nets a balance of 0. But individually you would see the transactions and could sum the credits and debits if you were so inclined. Alternatively, contra-accounts exist if reporting these individually is material for some reason.

by jjeaff 3y ago

ebolyen 3y ago

> You don't want negative numbers because that would require the description of a category to change based on whether it is positive or negative That's actually already how it works, the kind of inverse you use depends on if the account is credit-normal or debit-normal. You end up in the same place. > Imagine showing negative revenue. That would be mostly useless. Revenue is already credit instead of debit, which if you were consistent in using negative numbers, a negative revenue be completely correct (so you would want to sweat if revenue was a positive number). It's weird, but it lets your cash on hand be a positive number, which is just a necessary consequence of the system. > Imagine how misleading it could be to show $0 in expenses last month, when in reality, you had $100 in expenses, but you subtracted $100 out because you returned some big purchase from last month and got a refund. Wouldn't that be accurate? This would be a debit of 100 and a credit of 100 which nets a balance of 0. But individually you would see the transactions and could sum the credits and debits if you were so inclined. Alternatively, contra-accounts exist if reporting these individually is material for some reason.