Accounting

[hartmans]

I think I finally got the basic concept behind double entry bookkeeping. I've understood the rules for a while, but it hit me yesterday that all they are really saying is that the money you have plus the money you've spent better be the same as the money you owe, plus the money you've made plus the money you'd get to take away if you closed up shop. Of course there's a lot more complexity than that--and I actually think I already understood a lot of the complexity that an average person needs to understand. I was just missing the central concept.

Comments

[pwaa.livejournal.com]

I'm confused. (Shouldn't you be comparing all debits against all credits, not some combination of the two against some other combination of the two?)

[hartmans]

I wasn't actually talking about debits and credits, but classes of accounts.
Yes, debits balance with credits, and you can see consistency by seeing that total debits = total credits—or at least I cannot think of anything that violates that. However that didn't really give me any intuition for what was going on.