Inventory and payroll

[Phillip Shelton]

Hmmm, Yes, an "inventory" of dollars/euros/kroner is kept but (hopefully)
the value of the currency does not change. Whereas the value of the shares
per share is a continuiosly changing value.

The difference between counting dollars and bushels of wheat is that the
value of a dollar is "_one_ per dollar" and the value of a bushel of wheat
is "_X_ per bushel" where X is hopefully more that one.

"Inventory" is more than just how many do I own, it also includes some
measure of the dollar value that that many objects represents.  For currency
it is easy as the value is the same as the number owned.

-----Original Message-----
From: gnucash-devel-admin@lists.gnumatic.com
[mailto:gnucash-devel-admin@lists.gnumatic.com]On Behalf Of Bill Gribble
Sent: Wednesday, September 13, 2000 12:00 AM
To: Conrad Canterford
Cc: gnucash-devel@lists.gnumatic.com
Subject: Re: Inventory and payroll


On Tue, Sep 12, 2000 at 01:45:52PM +1100, Conrad Canterford wrote:
> OK, here are my thoughts on why we keep an inventory of shares in
> Gnucash. Please remember that I am not an accountant, so it is entorely
> possible I'm completely off track.

My spin on this is that the separation of "accounting" from
"inventory" as applies to Gnucash is a little bogus.  "Accounting" is
just a strategy for "counting."  We keep an "inventory" of shares for
the same reason that we keep an "inventory" of dollars/euros/kroner in
your bank account.  That is to say, we count how many of them there
are and we record that number.  *Every* accounting system is an
inventory system, if by inventory you mean "able to count how many of
something you own."

Purchasing or selling stocks or foreign currencies is a commodity
exchange transaction.  Two parties agree that quantity A of commodity
AA is equivalent to quantity B of commodity BB, and they exchange.
You have to be counting in the units appropriate for both AA and BB if
you want your records to be meaningful.  AA and BB can be dollars, IBM
shares, or bushels of wheat.  What's the difference between counting
dollars and counting bushels of wheat?

Gnucash does not have an inventory system, because when people want
"Inventory" (capital I) functions they are talking about depreciation,
different kinds of valuation schemes, specific kinds of tax accounting
rules, and so on.  That doesn't mean that you can't keep records for
accounts which are counting non-currency units.

Bill Gribble



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