debits, credits and reversals.

[Mike Evans]

On Sunday 28 Aug 2011 21:03:56 Jim & Grace Flowers wrote:
> Colin,
> 
> I don't know of any philosophical reason, but there is a definite
> bookkeeping reason.  One reason why debits must be recorded as credits and
> credits recorded as debits in a reversing transaction is for audit purposes.
> You personally may not need it for your personal accounts, but it is
> definitely needed for business transactions.
> 
Using double entry bookkeeping with a paper based based system it's much easier to add than to subtract and so fewer mistakes can occur.  See: 
http://c2.com/cgi/wiki?DoubleEntryBookkeeping
for a brief axplanation. There are more detailed sources elsewhere I'd guess.  

BBC Radio4 did an excellent (I thought)  series back in May about A Brief History of Double Entry Book-keeping.  Not available on i-player unfortunately.  (So not much help, but I thought I'd mention it).

Mike E


> To keep bookkeeping and accounting rules as simple and uncomplicated as
> possible, the same rules apply to both personal and business transactions.
> 
> Hope this helps.
> 
> Jim
> 
> -----Original Message-----
> From: gnucash-user-bounces+dondiegoflores=verizon.net at gnucash.org
> [mailto:gnucash-user-bounces+dondiegoflores=verizon.net at gnucash.org] On
> Behalf Of Colin Scott
> Sent: Sunday, August 28, 2011 2:18 AM
> To: gnucash-user at gnucash.org
> Cc: cscott at cix.compulink.co.uk
> Subject: debits, credits and reversals.
> 
> 
> >From time to time I need to reverse a transaction, for a number of 
> possible reasons.   Gnucash insists that to make the reversing transaction 
> I must use a debit amount to replace the credit, and a credit amount to 
> replace the debit.  So far so good.  However, It seems to me that the 
> purpose of the transaction it would be clearer if I were able to reverse 
> the sign of the values rather than their colums - ie, enter a negative 
> credit and a negative debit instead of a debit and a credit.
> 
> Is there some deep philosophical (or book-keeping!) reason why this is so, 
> and that negative values are not permitted except as balances?  I have 
> certainly been able to use negatives in other accounting systems I have 
> used ...
> 
> Colin
> 
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