On 21 Jun 2000 13:08:50 EST, the world broke into rejoicing as
Bill Gribble <[EMAIL PROTECTED]> said:
> > Alternative 3 is to just accept the transaction. It is an artifact
> > of gnucash that things must balance to floating point accuracy. The
> > reality is that the accountants consider it balanced when the
> > conversion error is within the roundoff error for the transactional
> > units.
>
> Are you kidding? Nobody just lets pennies drop off the face of the
> earth. Those fractional pennies are scrupulously kept track of by the
> bank, so why shouldn't they be kept track of by the user?
The last time I did interest calculations for banking software, we
did nothing of the sort.
It is typical for that software to be written in COBOL or PL/I,
where the operators round things appropriately behind the scenes,
and it is reasonably certain that IBM PL/I compilers _don't_
have "callbacks to analyze the rounding."
The "stealing the pennies" idea was entertaining enough when
presented by Richard Pryor in one of the worse of the Superman
movies, but keep in mind that this _was_ a "bad Superman movie."
But it just doesn't make sense for the Evil Bank to have some
magical account around where they track the Extra Pennies. Reality
is rather more mundane:
When the amount of the interest payment was _supposed_ to be $4.3245,
and they only paid you $4.32, they're not going to shunt 0.45 cents
somewhere; what happens is that this diminishes their
interest expense by that amount. They may have a report that will
evaluate the effects of rounding on the account portfolio, but
it makes NO sense for them to bother with the Very Silly Approach
of accounting for this via:
DR CR
Interest Expense $4.3245
Your Account $4.32
Richard Pryor's Secret
Rounding Account $0.0045
That's just silly. They'll go with:
DR CR
Interest Expense $4.32
Your Account $4.32
> In the example I gave, the brokerage probably a bought a hundred
> shares at 9 7/8 for $987.50, distributed 1 share to each person who
> bought one, charged them $9.88 each, and pocketed the 50 cents
> difference. Everyone's price was 9 7/8 (rounded to the nearest
> relevant unit).
They're not going to "pocket the difference;" for them to do that
would involve an equivalent Silly Accounting For This.
> It's not an "artifact of gnucash", it's an artifact of accounting. If
> what you paid is different from the total price of the items you
> bought, that money will end up in a third party's pocket, and it makes
> sense to record that. In any case, it *has* to be accounted for, even
> if the number that you're counting is smaller than 1.
The thing that's the case in _ALL_ of these cases is that that little
difference _ISN'T A SEPARATE BIT OF MONEY._
It's not tracked separately, except in bad Superman movies. It is
_VASTLY_ outweighed, for things like stocks, by the _BIG_ stuff like:
a) The $50 in commissions on the trade, and
b) The fact that the stock's price fluctuates from day to day.
--
[EMAIL PROTECTED] - <http://www.hex.net/~cbbrowne/lsf.html>
"And if you could lie on the floor without holding on, you weren't
really drunk :-)" -- Preben Guldberg <[EMAIL PROTECTED]>
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