Budget

[Mike or Penny Novack]

Dennis Hynes wrote:

>My financial budget comprises Assets, Expenses, Income and Liabilities
>(Credit Cards) it's the latter that confuses me because it does not
>subtract the liabilities rather it adds it to the bottom total which I find
>rather odd - can anyone help ?
>  
>
This is a "fundamentals of double entry bookkeeping" matter.

Having to remember (and use the correct operation) was seen as a 
possible source of error a few hundred years ago when double entry 
bookkeeping came into existence. For that reason, all amounts were 
positive (just possibly on the "other side of the ledger") and the only 
operation used addition.

Thus the fundamental equation is expressed as Assets = Liabilities + 
Equity rather than Assets - Liabilities = Equity

If you ever did bookkeeping in the old pen and ink on paper days you 
would appreciate the wisdom of eliminating (another) possible source of 
error. It was hard enough to find/correct all the miscopied or 
transposed digits errors without having to worry about possible wrong 
sign/operation errors.

Michael