[GNC] Default to Plain English instead of Debit and Credit

[Vincent Dawans]

I admit I am a bit lost as to what specific issue is being discussed here
beyond the (recurring) challenge of translating double-entry accounting in
simple terms, which is real but hardly a GC specific challenge.

As relating specifically to account balances (if this is what is being
discussed), then I do certainly understand the challenge of trying to show
balance in a single column because one way or another it requires using
positive or negative signs at some point. As far as I know, that's what the
'Reversed Balance Account" under Edit - Preference - Accounts let's you
tweak as a user in the context of single register and to some extend in the
transaction report as well (with some problematic side effects in totals
and running totals in that case). If you want accounts that TYPICALLY have
a credit balance to show a credit balance as a positive number in the
balance column, then the option is there. If you want income and expense
accounts to show a (respectively) negative and positive balance, then the
option is there. But it's purely a visual on the screen. By definition if
you bring credit and debit amounts in the SAME column combining
income/expense and asset/liabilities account types, then a standard has to
be used for one of debit/credit to be positive and the other negative.
Typically debit is positive and credit is negative, but you could do debit
negative and credit positive and it's fine as well mathematically. What you
CANNOT do is mix both of these standards in the overall accounting
equation, that simply is impossible math. But you can certainly "cheat" and
present things differently when only showing one type of account, or even
accounts limited to BS or P&L.

Other accounting systems I have used bypass this issue by simply never
putting debit and credit amounts in the same columns, even in reports and
even more so in registers. So in that case, you not only show 2 columns for
the transaction amounts as GC already does, but you also show 2 columns for
the account balance (debit and credit as well). Problem solved as no
negative numbers are ever shown in that case. With informal labels that
would look like this for a bank account for instance (the labels could be
different, just giving an example).

DATE      DESCRIPTION        DEPOSIT           WITHDRAWAL
 AVAILABLE BALANCE            OVERDRAFT DUE

Just as on every transaction you can only have a positive amount in either
the  DEPOSIT or WITHDRAWAL column, you would also only have one positive
balance amount shown in either the AVAILABLE BALANCE or OVERDRAFT DUE
column. I am not saying we should do this; I am just showing that the same
dual balance column concept could be implemented with informal labels.
After all, informal labels are just account-context-specific labels for
DEBIT and CREDIT, nothing else.

On accounts such as expense and income, it is very rare to have a
(respectively) credit or debit balance. So the informal headings are even
harder to come up with just as they are for the main contra-column (in
particular I am not a big fan of "charge" used for income debit); The words
rebate and refund have dual meaning since they can be seen from the person
being paid giving a refund or a rebate; or the person paying getting a
refund or a rebate. So even "Rebate" being the contra-account for expense
can be confusing. My personal preference would be to use refund and accept
longer names, such as "Refund Received" for the contra-expense accounts and
"Refund Given" for the contra-income accounts. As for how dual balance
columns (if used hypothetically) would be called, that's a whole other
matter.

Finally some accounting packages will show you a third type of dual
columns: the running debit total and running credit total. In the context
of income accounts for instance, it's the running total of all refunds
given and the running total of all income received (not reduced for refunds
given). Hardly something we want to do with GC but I am pointing this out
to show the real challenge of translating a simple yet powerful concept
(debit/credit) into everyday language without going overboard.

That's my take.

--Vincent

On Sat, Jul 1, 2023 at 8:00 AM Adrien Monteleone <
adrien.monteleone at lusfiber.net> wrote:

> I understand your post is in the context of the importer - which is a
> whole different beast, but discerning the 'normal' balance of account
> types is not a mystery. It is dependent on their position in the
> Accounting Equation.
>
>
> Assets = Liabilities + Equity
>
> *adding in the special Equity type account of Retained Earnings yields:
>
>
> Assets = Liabilities + Equity + Retained Earnings
>
>
> Retained Earnings = Income - Expenses
>
>
> thus:
>
>
> Assets = Liabilities + Equity + Income - Expenses
>
>
> moving terms so all are 'positive':
>
>
> Assets + Expenses = Liabilities + Equity + Income
>
>
> and since:
>
>
> Debit = Credit, Left Side = Right Side
>
>
> therefore:
>
> Assets & Expenses are normally (when positive) Debit balanced accounts
> (left side), and Liabilities, Equity & Income are normally (when
> positive) Credit balanced accounts (right side).
>
> Gnucash treats the equation differently internally, so by default this
> is a bit different:
>
> Assets + Expenses - Liabilities - Equity - Income = 0
>
> thus:
>
> By *default* in Gnucash, Liabilities, Equity & Income normally show
> their Credit balances as negative numbers. (because their terms have
> been moved to the opposite, or left, side of the equation in the code)
> The 'Reversed Balanced Accounts' preference adjusts the *presentation*
> back to the original equation per your liking. Internally, these
> accounts remain negative when they have a credit balance.
>
> -----
>
> Your below chart looks correct except the one type I noted below:
>
> Regards,
> Adrien
>
> On 6/30/23 11:00 PM, flywire wrote:
> > Is it CR or DB? Who knows, toss a coin:
> > https://bugs.gnucash.org/show_bug.cgi?id=798964
> >
> > An interesting list of accounts adapted from a comment with an `*` next
> to
> > the main account types:
> >
> > * BALANCE ACCCOUNT TYPE       DEBIT    CREDIT
> >    debit            NONE       Funds In Funds Out
> >    debit            BANK       Deposit  Withdrawal
> >    debit            CASH       Receive  Spend
>
> -----
> >    debit            CREDIT     Payment  Charge
>       credit           CREDIT     Payment  Charge
> *A Credit Card type account is a Liability and thus normally has a
> Credit balance.
>
> -----
> > * Debit            ASSET      Increase Decrease
> > * Credit           LIABILITY  Decrease Increase
> >    debit            STOCK      Buy      Sell
> >    debit            MUTUAL     Buy      Sell
> >    debit            CURRENCY   Buy      Sell
> > * Credit           INCOME     Charge   Income
> > * Debit            EXPENSE    Expense  Rebate
> > * Credit           PAYABLE    Payment  Bill
> > * Debit            RECEIVABLE Invoice  Payment
> >    credit           TRADING    Decrease Increase
> > * Credit           EQUITY     Decrease Increase
>
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