omichowdhury

4 ms·

1.
by omichowdhury 2y ago
I completely forgot what the original post I was replying to was about lol. If it was about lemonade then yup the lemons and the lemonade should be on the books as assets. I’ve also wondered what to do if you grow your own lemons. I guess y
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by omichowdhury 2y ago
I guess technically this would be selling a service instead of a good. I was going through the 4 combinations of balanced two-line entries, based on the accounting equation, to show how it helps when thinking through how to record something
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by omichowdhury 2y ago
Haha that sounds like shut-up-and-calculate to me. The alternative is to update the rules to use our intuition on whether the action we’re tracking is good or bad for us and map that to increasing or decreasing balances that represent what
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by omichowdhury 2y ago
Yup I think it’s best to leave credits and debits behind. We can use more than 2 bits these days. I think a far more intuitive system is use negative numbers with a symmetrical accounting equation: Assets - Liabilities = Income - Expens
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by omichowdhury 2y ago
I don’t think you need to think of income accounts as negative if the ledger you use enforces an updated accounting equation that also uses negative numbers, See https://news.ycombinator.com/item?id=40021506
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by omichowdhury 2y ago
Nope, in these examples the +Asset on the left means you received say cash. The right side shows various ways to balance that out based on the accounting equation I did an explanation with numbers here: https://news.ycombinator.c
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by omichowdhury 2y ago
We implemented negative numbers in our ledger API ( https://fragment.dev ) and don’t use credits and debits at all. A bunch of engineers who didn’t know double-entry found it a lot easier to pick up. I think the key is to update t
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by omichowdhury 2y ago
I think you’re missing the balancing that needs to happen that’s internal to each party’s books. That’s where an expense account would come in, using the accounting equation: ∆ State = ∆ Change ↓ A
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by omichowdhury 2y ago
I think you’re right that currency is technically what I meant by money in that sentence. Like you said most people equate the two, which is why I prefer to use the word “value” for the various promises we track in accounting. It just has l
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by omichowdhury 2y ago
While money can’t be created or destroyed (unless you run a central bank…), value can be. Ledgers always have a specific perspective, and that perspective can assign a different value to something than someone else. In the case of gifting s
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by omichowdhury 2y ago
I think the fundamental problem is the traditional accounting equation: Assets + Expenses = Liabilities + Equity + Income We try to group the accounts by left and right side and find a common term for them (credit-normal and debit-no
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by omichowdhury 2y ago
The reason isn’t to double the amount the work to catch errors. storing both sides genuinely stores extra metadata about the transaction that is not captured by only storing it once. In double-entry, you’re tracking two different things: -
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by omichowdhury 2y ago
Yup, this is the same way of thinking I described here: https://news.ycombinator.com/item?id=39994335 Instead of grouping together accounts into credit-normal and debit-normal, to make things balance, I think it’s more intu
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by omichowdhury 2y ago
Yeah, I think a more intuitive way is to replace credit and debit with State and Change as the pair of things in double-entry. It means that you don't have to swap meanings based on context and can use negative numbers intuitively. Sta
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by omichowdhury 3y ago
I don't work at Stripe, but I've talked to a few ledger nerds there. One thing I'd point out that makes Stripe's ledger different than most others you might have seen or encountered is the granularity of what they consid