On Sun, 30 Apr 2000, ich wrote:
> John Hasler wrote:
> > 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.
I agree. When debits are posted to a debit account, they are "positive"
entries -- they increase the total. When credits are posted to the same
account, they are "negative" -- they decrease the total.
Similarly, for credit accounts, things are reversed; debits decrease the
total and credits increase it.
When I talk about income and expenses, I do so in the "positive" (not
necessarily "good") manner. I earned income of $1000 and had expenses of $800.
> > Even this could be avoided by use of the parenthesis
> > favored by bookkeepers or the canonical debit-credit T account notation.
"negative" entries are NOT the same as debit-credit.
You can have "negative" credits. For example, (unless I have it backward)
income is a credit account. When I earn some income, I debit the bank account
and credit the income account. Income credits are "good". One form of income
is the sale of an asset. I debit the bank and credit the asset account. To
balance the transaction, I also credit "capital gains" for the profit.
However, if I actually had a loss, it can be viewed that I credit "capital
gains" with a negative amount.
As for the display of accounts, "minus signs", parenthesis, and "red ink" are
all proper methods of displaying a number that is "backward".
T-accounts have nothing to do with this.
Normal accounting procedures do not mix assets, liabilities, income, and
expenses. There is a separate section for each of them. It is only when we
attempt to combine, for example, income and expenses on the same report
that we have a problem.
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