On 28 Apr 2000 09:39:55 CDT, the world broke into rejoicing as
John Hasler <[EMAIL PROTECTED]> said:
> Herbert Thoma writes:
> > This way I get a positive balance in my bank account to pay my bills with
> > and a negative balance in the liability account to reflect the fact that
> > I owe this money to the bank...
>
> To an accountant or bookkeeper a negative balance in a liability account
> means that they own you money (this will happen if you overpay your phone
> bill, for example).
May I be anal retentive and reword this?
If I am an accountant, and look at the books of my company, a "negative"
balance in a liability account, aka "a debit balance," indicates that,
contrary to the usual state of affairs, somebody _owes_ the company money.
As you suggest, this would happen if the company overpays the phone bill.
> > Of course I want it [income] sign reversed: When I get an Income then I
> > do a transfer FROM an income account TO a bank account, so the income
> > account gets more negative and the bank account gets more positive.
>
> You don't transfer from an income account to an asset (bank) account. You
> record the fact that the transaction resulted in income with a credit to an
> income account and record the fact that it resulted in an increase in an
> asset with a debit to an asset (bank) account. Income and assets both
> increased. I don't think most people want negative income.
Herein lies the dilemma:
If we "fold" the usual "debits" and "credits" of accounting into _one_
field, then there are two choices:
a) Play games with signs all the time, so that it's anybody's guess
whether the sign is right, or
b) Take the approach that "Debit" == "Positive" and "Credit" == "Negative",
so that an income account, under normal circumstances, will have
a negative balance.
You seem to be taking the value judgement that a negative balance in
the income account is somehow a Bad Thing.
In the representation that uses Debits and Credits, there is no such
value judgement made; there is _always_ a debit and an equal, opposing
credit.
The fact that you seem to think that "negative income" is somehow
a bad thing strengthens my sense that it would be better to have
an unambiguous, "philosophically value-free" representation like
debits/credits where the notion that "negative is bad" is clearly
nonsense since there _are_ no negatives.
> > The same with an Expense. Transfer FROM bank TO expense. Bank acount
> > balance lowers, expense account balance gets higher.
>
> You don't transfer to an expense account from an asset (bank) account. You
> record the fact that the transaction resulted in expense with a debit to an
> expense account and record the fact that it resulted in a decrease in an
> asset with a credit to an asset (bank) account.
Agreed.
> > This way income accounts have negative balances and expense accounts have
> > positive balances. This is perfectly sensible for double entry because
> > everything adds up to zero.
>
> With double entry total debits equal total credits. Neither word is a
> synonym for 'negative'. Gnucash uses negative numbers for debits
> internally (apparently this is about to reverse), but it does so only for
> computational convenience. IMHO the only reason negative numbers should
> ever appear on the screen is to indicate that something is "backwards", as
> when you overpay a bill and consequently have a debit balance in an account
> payable. Even this could be avoided by use of the parenthesis favored by
> bookkeepers or the canonical debit-credit T account notation.
The need to both calculate and indicate "backwardsness" is a disturbing
result, adding to the complexity of the system.
> > Only for convenience I like it displayed sign reversed.
>
> As I understand it the intent of sign reversal was to "correct" the
> engine's internal +- convention so as to make all normal balances appear
> "normal", i.e. positive.
>
> > No, see above. Income accounts negative, expense positive.
>
> I don't think most people want negative income.
Do most people want negative assets? Because that is the implication
of making income positive.
--
Isn't it a bit unnerving that doctors call what they do "practice"?
[EMAIL PROTECTED] - <http://www.ntlug.org/~cbbrowne/lsf.html>
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