Techie hot-shots "discover" double entry accounting

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#1
makbo  
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You've probably heard of Square, that payment processing company known for enabling smartphones to be business POS machines.

I was amused to see them, after ten years, breathlessly discover double entry accounting. Why, they even came up with a clever name for transactions, I see!

https://developer.squareup.com/blog/boo ... e-service/

"To address consistency, we picked a well-established, public-domain, battle-tested approach to modeling financials that enables all of our properties: Double Entry Accounting.

Double Entry Accounting forces you to state not just what financial state change occurred, but why. The accounting equation states that all transactions (which we call “journal entries”) must balance to 0, so each cent lost is matched with a cent gained."
 

#2
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"which we call 'journal entries'"

I wonder what novel and grand innovations they might discover and coin a useful name for TODAY!
~Captcook
 

#3
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Today's new development -
We realized that, after making all these "journal entries" on your "books," it would be helpful if the account balances were all together on some kind of sheet. We call this a "balance sheet."
 

#4
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I've used Square to accept credit cards for several years, but that makes me reconsider a lot of things...

On a related note, does anyone brand their accounting software services as private blockchain implementation and support? That might go over well in Silicon Valley...
 

#5
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I have forgotten the names used when distinguishing between the general ledger accounts that get closed when the books get closed and those that don't. It - the distinction between these two types of general ledger accounts - was indispensable in the explanation of how and why general ledger accounting does what it does.

Permanent and temporary?

When I try to recall what I can about that topic, all I get is white noise on my memory screen.

Then I turn on the TV, and they're talking about age-related memory loss.

Oy.
 

#6
makbo  
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From H&R Block "Introduction to Accounting Principles" textbook (the stuff that some CPAs think only they know about.. :shock: )

"Income statement accounts are nominal, or temporary accounts. Recall that the income statement measures financial performance during a period of time, such as a quarter or year. When a new accounting year begins, the income statement accounts must be reset to zero so they can begin accumulating accounting data for the next year.

Balance sheet accounts are real, or permanent accounts. The closing balances at the end of one year become the opening balances for the beginning of the following year."


Quickbooks does not ever "close" any accounts, it just generates the requested reporting info in real time, so the concept of "closing" is more of a legacy concept than something that happens in real life these days. (QB does allow you to set a "closing date" which generates a warning or requires a password if transactions prior to a certain date are about to be modified.)
 

#7
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Ahhhh. Thank you. Nominal or temporary, and real or permanent. Maybe because each had *two* names...?

And who made *QuickBooks* the arbiter of how to keep books of account?
Last edited by Harry Boscoe on 9-Nov-2019 5:39pm, edited 1 time in total.
 

#8
makbo  
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Harry Boscoe wrote:Nominal or temporary, and real or permanent.

I've always just thought of them as "Income statement" and "balance sheet" accounts. I wrote my own double entry accounting program once (for the PC, back in the 80s), and those are the indicators I used in my program to determine which accounts got closed. I don't know why we need any other terms for them.

Harry Boscoe wrote:And who made *QuickBooks* the arbiter of how to keep books of account?

I didn't say QB was authoritative. I said it is how accounting gets done in real life these days.

Although most businesses are small businesses (last time I saw a statistic on the matter), I wonder what accounting programs the very large businesses use? Do those programs still actually do a hard "close" of the books for every accounting period?

Or is it just a bunch of overpaid over-worked Big 4 bean counters consolidating a bunch of separate reports in Excel? ;)
Last edited by makbo on 9-Nov-2019 6:06pm, edited 1 time in total.
 

#9
makbo  
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missingdonut wrote:On a related note, does anyone brand their accounting software services as private blockchain implementation and support? That might go over well in Silicon Valley...

But does it make any sense? Blockchain is a distributed database that is not under the control of any single entity. That makes it good for banking & investment transactions, or exchanging patient health information between providers, patients, and insurers, or for other "marketplaces" where many unrelated people exchange data. But for internal business accounting, it is going to be under the tight control of the entity using the software, so what benefit would there be to a blockchain foundation? (Or maybe I didn't understand that part of your question)
 

#10
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makbo wrote:
missingdonut wrote:On a related note, does anyone brand their accounting software services as private blockchain implementation and support? That might go over well in Silicon Valley...

But does it make any sense? Blockchain is a distributed database that is not under the control of any single entity. That makes it good for banking & investment transactions, or exchanging patient health information between providers, patients, and insurers, or for other "marketplaces" where many unrelated people exchange data. But for internal business accounting, it is going to be under the tight control of the entity using the software, so what benefit would there be to a blockchain foundation? (Or maybe I didn't understand that part of your question)


I was being tongue-in-cheek.
 

#11
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Actually, QuickBooks has changed how accounting is done nowadays. It's not the accounting that is being taught in colleges. It's based on what works with programming and particularly web-based programming. I still remember how QBO "explained" that a payment on a credit card which QBO recorded as income, was in "reality not income" as QBO said after years or months of recording customers credit card payments as income in QBO.
 

#12
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Did you see the T account output?....funny the author sounds very very excited about this.
 


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