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I've never understood that either. As a computer guy it always struck me as a redundancy -- the kind of redundancy where one thing will always eventually be wro
by jfengel 2y ago
I've never understood that either. As a computer guy it always struck me as a redundancy -- the kind of redundancy where one thing will always eventually be wrong.
I assumed it has to do with the fact that it was invented for bookkeeping by hand. Accountants assure me that it's even more important with computers, but I've never managed to figure out how that works
- fallingknife 2y agoNeither have I. It always seems like a massive cargo culting. Human accountants are liable to make very different kinds of mistakes than computers.
- dboreham 2y agoI've been doing this so long that I've finally realized that if someone can't explain why something is the way it is, that means it's wrong, or at least some arbitrary choice among several equally good alternatives.
- dagenix 2y agohttps://en.wikipedia.org/wiki/G._K._Chesterton#Chesterton's_fence https://en.wikipedia.org/wiki/G._K._Chesterton#Chesterton's_...
- bvrmn 2y agoThe funny thing with debit/credit wall: only long dead Italian merchchants knew its purpose.
- ffsm8 2y agoBeing able to explain it is something different then you being able to understand it. And double entry bookkeeping should be both easy to explain (there are countless articles for it, precisely because it is a pretty easy concept) And easy to understand if you have ever tried to keep a ledger of transactions around and wanted to audit it for errors.
- jfengel 2y agoI always get hung up on the different kinds of accounts and their respective definitions of "credit" and "debit". It isn't that much to memorize but it's very counter to the way I understood those terms and it keeps throwing me off.
- FredPret 2y agoThe simplest way to memorize it is to remember the accounting formula and one simple rule. - Assets minus Liabilities = Equity (net worth) - Your bank account or cash balance increases on the debit side From this you can figure out that if you borrowed money, the debt increases on the credit side and the cash influx debits your bank account. The same goes for an income.
- bvrmn 2y agoBut signed amounts (instead of debit/credit) formula is a way easier. Sum of entries of assets/liabilities accounts = Equity. Moreover assets and liabilities become one type.
- FredPret 2y agoThat is why I sincerely hope this way takes over the debit/credit approach
- BlueTemplar 2y agoAnd single entry bookkeeping is even "easier". Doesn't mean it's a good idea.
- bvrmn 2y agoSingle entry is not easier. Every time it makes things horribly complex really fast. I don't understand your point.
- jfengel 2y ago
- thaumasiotes 2y ago> As a computer guy it always struck me as a redundancy -- the kind of redundancy where one thing will always eventually be wrong. That's the purpose. If you have a system with no redundancy, it's equally true that something will always eventually be wrong. But in that case, you'll have no way of knowing what's wrong. With the redundancy, you can detect problems and often determine what happened.
- nicwilson 2y agoDouble entry accounting is still error prone, but single entry accounting is fraud prone.
- Aspos 2y agoA single debit can result in many credits. A single record can (and will) be lost. Network issue, db issue, etc., some transactions will not make it to the db. With double entry you at least have a chance of reconciling the lost transaction.
- kdmtctl 2y agoIt is not a redundancy. Actually the meaning of a transaction encoded in a pair of accounts. You will need to store it somewhere anyway in a real world scenario, but predefined account pairs is the universal language. The accounting system.