Terminology Clarification requested

[John Ralls]

On Dec 9, 2010, at 1:10 PM, Thomas Bullock wrote:

> Hi,
> 
> Using this excerpt as a context:
> 
> Message: 1
> Date: Tue, 7 Dec 2010 09:33:58 -0800
> From: John Ralls <jralls at ceridwen.us>
> Subject: Re: close books
> To: Derek Atkins <warlord at MIT.EDU>
> Cc: devel gnucash <gnucash-devel at gnucash.org>
> Message-ID: <2B1F2747-854C-430C-8AAA-05637E30AB51 at ceridwen.us>
> Content-Type: text/plain; charset=us-ascii
> 
> 
> [...]
> 
> A KVP *is* better, but because it's better architecture: The closing-entry mark would apply only to one transaction per year, would only be important to one split in that transaction (the income/expense split; one wouldn't want to hide the split from equity reports), and wouldn't have any applicability to any transactions which don't touch income or expense accounts. Something of such limited scope doesn't deserve a column.
> 
> Note that the KVP should be on the split, not the transaction, because many income/expense reports don't need to look at the whole transaction, they just need to total up the credits and debits shown in the splits occurring between two dates.
> 
> Regards,
> John Ralls
> 
> 
> 
> Let me ask your help as I work my way to a new understanding of the term "transaction".
> 
> My formation long ago as a young accountant contained this understanding of a transaction: it was the accounting expression of an activity that happened in the physical world, which the accounting ledgers were tracking in their own notation.  For example, suppose the activity is buying a car using cash and debt on 11/10/2010.  The accounting transaction is that act of purchase.  The accounting notation was the language of debits and credits with accompanying names describing the purpose of the monetary "buckets" or value holders.
> 
> Thus, in a journal, the transaction would be recorded similarly to this:
> 								    Debit	      Credit
> 	11/10/2010		New car                     15,000
> 	11/10/2010		New car loan					10,000
> 	11/10/2010		Cash in bank					 5,000
> 
> Above John says "...the KVP should be on the split, not the transaction,..." but in a later follow-up
> Derek says that the KVP should be on the transaction and not on the split, noting further that the date is resident in the transaction and not the split.
> 
> Which of the above in GC terminology is the "transaction" and which the "split"?  What makes one of the parts of the above the "transaction" and the others the splits?  Can any one of the 3 parts be named the transaction be different people?  What keeps the transaction from being arbitrarily identified?
> 
> In my mind all three parts are splits and there is no transaction unless all three are there with debits and credits in balance. If one or two parts are missing, the transaction is said to be incomplete or broken, because it would not balance.
> 
> Clearly, GC has a different sense of naming these elements and it is important to include in basic documentation a clear discussion of the terminology as used in the GC world and as used in the Accounting world.  I am not interested particularly in changing GC usage.  I am interested in understanding clearly how developers see things and why things are perceived that way.  Once I see that perspective, then the documentation as presently written will become clearer, at least to this accountant, and I expect others in the Users' List.
> 
> Thanks to all who can help me with this.
> 

Tom,

Sorry, Derek and I were in programmer mode in that exchange, not accountant mode. We were talking about two data structures in the program, which are mostly equivalent to the accounting terminology. 

So we have a data structure called a "transaction" that includes a variable number (but at least 2) of subordinate data structures called "split", along with some date fields, and some "key-value" or KVP data. Each split contains an account, an amount, and some more KVP data. The splits are required to balance, otherwise the transaction is marked as unbalanced and displayed with a little gray ☒ in the amount fields.

The exchange was about in which data structure it makes more sense to attach a KVP "flag" indicating that it's a closing transaction (i.e, a transaction moving a summary amount from an income or expense account to an equity account).

Regards,
John Ralls