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> […] reason you do double entry: error detection This is a misconception and if you think about it, it doesn’t make a lot of sense since the two records are g

by sorbits 12y ago

> […] reason you do double entry: error detection This is a misconception and if you think about it, it doesn’t make a lot of sense since the two records are generally generated by a system that gets a single value from the user, so it would be a software error if they did not even out. Accounting errors are normally human errors, e.g. entering the wrong amount or specifying the wrong account, none of which are errors that double entry accounting will catch. However, double entry accounting gives us an audit trail because it tracks how assets are moved between accounts, so if the balance of an account is not as we expect, we can go back and see exactly why it is what it is.

nitrogen 12y ago
Double-entry accounting predates software implementations thereof. When writing values by hand into two different physical ledgers, it would serve as a limited form of error detection.
vonmoltke 12y ago
> This is a misconception and if you think about it, it doesn’t make a lot of sense since the two records are generally generated by a system that gets a single value from the user, so it would be a software error if they did not even out. That applies to a software system, but not a handwritten ledger. In the latter, it does serve as an error detection mechanism because a human has to enter both values and other humans have to read them clearly. You are correct, though, that the primary reason for double-entry is audit trail.
lchengify 12y ago
> However, double entry accounting gives us an audit trail because it tracks how assets are moved between accounts. Ah, makes sense. My understanding of double-entry comes from history rather finance. I read a few articles on Italian history, specifically the Medici family with Florentine banks and hand-written ledgers. I'm not an accountant, in practice it makes more sense as an audit trail. I guess you could stretch the metaphor further and say that a SCM + testing gives you the equivalent of double-entry. However in practice, I've never had much trouble convincing anyone to use a SCM :).

by sorbits 12y ago

nitrogen 12y ago

Double-entry accounting predates software implementations thereof. When writing values by hand into two different physical ledgers, it would serve as a limited form of error detection.

vonmoltke 12y ago

> This is a misconception and if you think about it, it doesn’t make a lot of sense since the two records are generally generated by a system that gets a single value from the user, so it would be a software error if they did not even out. That applies to a software system, but not a handwritten ledger. In the latter, it does serve as an error detection mechanism because a human has to enter both values and other humans have to read them clearly. You are correct, though, that the primary reason for double-entry is audit trail.

lchengify 12y ago

> However, double entry accounting gives us an audit trail because it tracks how assets are moved between accounts. Ah, makes sense. My understanding of double-entry comes from history rather finance. I read a few articles on Italian history, specifically the Medici family with Florentine banks and hand-written ledgers. I'm not an accountant, in practice it makes more sense as an audit trail. I guess you could stretch the metaphor further and say that a SCM + testing gives you the equivalent of double-entry. However in practice, I've never had much trouble convincing anyone to use a SCM :).