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I am not sure if this is a user or devel subject so please forgive me if
I have used the wrong list. I am also sorry about the lenght of this
missive.
I have noticed, and suffered it my self, that a lot of new users of the
double entry system seem to be confused as to why it is needed and how
to use it. I bought a book (that is going out of print) that helped me
greatly. If any of the following is going to be of any use I can
contact the publisher to see if we can get permission to repoduce it in
the gnucash docs.
First, who the record is for.
... In the analysis of transactions, it is necessary that they be
recorded from the viewpoint of the firm itself, [in our case, the user]
otherwise the directions of the flows will be reversed ...
Then what is flowing and which way is it going.
... all transcations involve a flow of resources of cash into the
firm and a reverse flow of cash or resources out of the firm to the
particular source concerned. Thus, when resources are purchased from
the factor markets, resources flow in and cash is paid out; when the
firm sells goods and services, resources flow out and cash flows in. On
the input side, all inward flows of purchased resourses are debited in
the relevant resource accounts, and the related cash outflow to the
factors is credited in the cash account. On the output side, all
outward flows of goods and services are credited in the sales account,
and the cash received in return is debited to the cash account. ...
[examples left out] only two rules are needed for determining the debit
and credit aspects of a transaction --- all inward flows are debited in
the appropriate account, and all outward flows are credited in the
related account. ... debit the account into which the item flows (where
to?) , and credit the account from which it flows (where from?). The
credit account can be referred to in general terms as the source
account, and the debit account as the inflow account. These two rules
for debit and credit are completly general and they cover all credit
transactions plus all internal transfers of values ...
It should be noted that each transaction must affect two accounts.
Every transaction must have a debit in one account and an equal credit
entry in another if the two-way flow aspects are both recorded . ...
A.D. Barton, The Anatomy of Accounting, third edition. Universtiy of
Queensland Press
If the above is usefull then I will try to get the permision to allow us
to use it.
Phill
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I am not sure if this is a user or devel subject so please forgive me if
I have used the wrong list. I am also sorry about the lenght
of this missive.
I have noticed, and suffered it my self, that a lot of new users
of the double entry system seem to be confused as to why it is needed and
how to use it. I bought a book (that is going out of print) that
helped me greatly. If any of the following is going to be of
any use I can contact the publisher to see if we can get permission
to repoduce it in the gnucash docs.
First, who the record is for.
... In the analysis of transactions, it is necessary
that they be recorded from the viewpoint of the firm itself, [in our case,
the user] otherwise the directions of the flows will be reversed ...
Then what is flowing and which way is it going.
... all transcations involve a flow of resources
of cash into the firm and a reverse flow of cash or resources out of the
firm to the particular source concerned. Thus, when resources are
purchased from the factor markets, resources flow in and cash is paid out;
when the firm sells goods and services, resources flow out and cash flows
in. On the input side, all inward flows of purchased resourses are
debited in the relevant resource accounts, and the related cash
outflow to the factors is credited in the cash account.
On the output side, all outward flows of goods and services are
credited in the sales account, and the cash received in return
is debited to the cash account. ... [examples left out] only two
rules are needed for determining the debit and credit aspects of a
transaction --- all inward flows are debited in the appropriate
account, and all outward flows are credited in the related account.
... debit the account into which the item flows (where to?) , and credit
the account from which it flows (where from?). The credit account
can be referred to in general terms as the source account, and
the debit account as the inflow account. These two
rules for debit and credit are completly general and they cover all credit
transactions plus all internal transfers of values ...
It should be noted that each transaction must affect
two accounts. Every transaction must have a debit in one account
and an equal credit entry in another if the two-way flow aspects are both
recorded . ...
A.D. Barton, The Anatomy of Accounting, third edition. Universtiy of
Queensland Press
If the above is usefull then I will try to get the permision to allow
us to use it.
Phill