Jump to content

Talk:Double-entry bookkeeping

Page contents not supported in other languages.
From Wikipedia, the free encyclopedia

This article has become way to complicated

[edit]

New discussion should be at the end of a talk page, not the beginning. I have moved it to the end. Greensburger (talk) 16:44, 20 January 2012 (UTC)[reply]


Anybody who doesn't know the different between "to" and "too" must be kept far away from anything having to do with debits and credits. They can't be trusted with "two," let alone with the question of which direction the two might be headed.
I have some minor quibbles with the article, but overall it is measured, trustworthy, and accurate. My congratulations to whoever wrote it.
Complexity is not one of its shortcomings.
David Lloyd-Jones (talk) 16:43, 25 September 2016 (UTC)[reply]

This article has become way to complicated

[edit]

Double entry bookkeeping is not complicated. Do you want to explain a process or do you want to explain double entry and how it works. This article should be easy to read for the non accountant, but I feel it has become too technical using words non financial people would not understand. What you think? NilssonDenver (talk) 23:49, 23 May 2011 (UTC)[reply]

I agree

[edit]

It needs to fit with the more general Bookkeeping page. Some initial thoughts on improvements might include :

I don't think the "traditional Method" is very common. I know it doesn't form part of the UK Accounting Institute's syllabus (ICAEW). It might be better to have this as a seperate article or something to make the main double entry article more concise.

The accounting equation should include also include something about : Opening Equity + (income/gains) - (expenditure/losses) = Closing equity. A lot of book keeping is about income and expenditure. For non accountants these are also easier concepts to understand than assets/liabilities/equity. There could be a better explanation about how double entry relates to income and expenditure.

I'd shorten the books of prime entry section, so it dealt with one or two examples of debits and credits. The detail of each book prime entry book, could then be kept seperately.

I think it would be helpful to explain a little about Dr/Cr being opposite sides of the equation, which means when presenting them they always have oppposite mathematical signs (one positive, one negative).

If i have some time, i might try to do a major edit of this. I've not done such a thing before. I understand i should put it on my own pages first so it can be viewed / commented. I think it makes sense that all the information included should be somewhere on wikipedia - so i wouldn't delete something unless it was duplicated. {{help me}} Could someone direct me to any other guidance on how to go about doing this?

(TomEspley (talk) 08:52, 20 January 2012 (UTC))[reply]

If you wish to create a page in user space it's just like any other page - in this case you would create User:TomEspley/Double-entry bookkeeping system, then copy the entire article from the article to the new page. I would also add at the top of the existing article - a Template:under construction - use the comment field to explain what is happening. Remember to make a note the date of the version you are starting on, when it become time to copy and paste back the revised article, you will first have to check on what subsequent edits were made while you have been working on the user copy, and if those edits need to be incorporated into the article.  Ronhjones  (Talk) 22:24, 20 January 2012 (UTC)[reply]

The content of this article is largely redundant with Debits and credits

[edit]

The Debits and credits article is in much better shape as well. Cfn137 (talk) 07:21, 24 January 2012 (UTC)[reply]

Move "Traditional Method" to a separate article?
[edit]

Tom's remark that the "Traditional Method" is not very common and does not form part of the UK Accounting Institute's syllabus (ICAEW) suggests that either:

1. the Traditional Method was once widely used, but is now obsolete, or
2. the Traditional Method was never widely used and was proposed in a book years ago that is now mostly forgotten.

The reference cited for the Traditional Method was printed in India, which suggests that maybe it was not widely used outside of India. If it was never widely used, then a one sentence historical footnote is all it merits in Wikipedia. There have been many thousands of failed proposals that are not worth mentioning. If it was once widely used, still taught in a few places such as India, but is now largely forgotten elsewhere, then I agree with Tom's suggestion that the Traditional Method should be briefly described in a new separate article. Greensburger (talk) 17:09, 20 January 2012 (UTC)[reply]

From what I can tell, the only difference between the two methods are the rules used to determine the effects of a debit or credit in a given account. Assets are real accounts, liabilities and capital accounts are personal accounts, and expense and income accounts are nominal accounts. Furthermore, there is an assumption that nominal accounts are closed at the end of an accounting cycle by transfer to the owners' capital accounts. I don't think the "traditional approach" is either obsolete or forgotten, because there is no need to choose one system over the other. Cfn137 (talk) 07:00, 24 January 2012 (UTC)[reply]

trebit

[edit]

How does that work? — Preceding unsigned comment added by 178.190.200.117 (talk) 21:05, 28 October 2012 (UTC)[reply]

a CLEAR AID to remember the normal balance of accounts

[edit]

At my college at least, everyone was taught a simple mnemonic for remembering the normal balance of accounts.

Dr. Cr.
Assets Capital
Drawings Liabilities
Expenses Revenues

You remember it as aid and clear. This is for proprietorships, so they stand for assets, drawings and expenses on the Dr. side and capital, liabilities and revenue on the revenue side. It sounds like it's kind of dumb and not so intuitive that it'll help you remember, but it was surprisingly effective in helping people remember the normal balance of these elements, as well as what were the elements in a sole proprietorship to begin with. The way the "American Approach" was presented in this article in which each element must be memorized on its own is not how I've ever seen it. Everyone at my school seemed to learn the accounts in the context of grouping them together, learning the normal balance of each account and then remembering that posting to the normal side of an account increases it. That is, all accounts with a normal debit balance (assets, drawings and expenses) are increased by debits, while those with credit balances are increased by credits.

However, I don't know how well-known this or widespread this learning method is, and thus decided to bring it up in the talk page to get a feel for its notability and whether it should be included.

Gn341ram (talk) 13:47, 29 November 2013 (UTC)[reply]

I think a useful mnemonic for normal balances would be worthy of inclusion, if there is a verifiable source. At least, that's my opinion, I'm not aware of any Wikipedia standards for such things. Is this printed in a textbook you could reference? Ivanvector (talk) 21:04, 29 November 2013 (UTC)[reply]
It seems to show up on edu websites in various forms, but I can't really find a real academic source on it. My old accounting textbooks don't mention it. One power point presentation references this book: http://www.amazon.com/Financial-Accounting-9th-Walter-Harrison/dp/0132751127 - in their version they cite the mnemonic as Common Stock and Capital instead of just capital and Revenues and Retained Earnings instead of just revenues. However, since I don't own a copy of that text book to verify, but the website that cited it was an edu website, is it still citable? Still another problem with this source is that it is only a power point slide and does not actually contain the words (or spelling of) "Aid / Clear." A google search shows that the mnemonic is known in very different parts of the country, but there aren't that many results. It may have something to do with not knowing exactly what to search for. So perhaps this should have to remain off wikipedia for the time being. I did, however, come across the quite amusing acronym of "DEAD" meaning "Debits increase Expenses, Assets and Drawings." On a forum, one teacher said she tells her students that the Balance Sheet is where you get your ALE (Assets = Liabilities + Equity). In fact, there seems to be so many mnemonics, not one of them in particular is noteworthy.

Gn341ram (talk) 22:08, 29 November 2013 (UTC)[reply]

I'd have to agree with you then. If there were one or a few mnemonics that were definitely taught in a broad range of accounting schools, I'd say include them, but it does seem like there are lots and lots that only a handful of people know from anecdotes. Personally I was never taught one. Some of these are fun though! Ivanvector (talk) 22:24, 29 November 2013 (UTC)[reply]

What you've got, and where it comes from

[edit]

Would it be correct to say that double entry bookkeeping not only records what you've got (as in simple bookkeeping), but also where it comes from? To me, struggling to get my head around DEB, this makes it understandable. The article introduction seems to describe accounting tricks and mechanics rather than what DEB is fundamentally all about - being able to record where the money has come from. I got this idea from watching a 3 minute video Basic Principles Of Double Entry Bookkeeping on YouTube here https://www.youtube.com/watch?v=2-HK4qSz6cA 92.29.118.69 (talk) 11:43, 10 June 2014 (UTC)[reply]

The video is a pretty simplistic explanation, but it is correct at a high level for assets and liabilities/equity. The analogy starts to fall apart when you get into income and expenses, and closing entries. You might find the article on debits and credits useful. Ivanvector (talk) 16:45, 10 June 2014 (UTC)[reply]

Who invented it?

[edit]

This article "So, Who Invented Double Entry Bookkeeping? Luca Pacioli or Benedikt Kotruljević?" suggests an earlier inventor - is it correct? If so perhaps one could update the article? I also recall a story about the Ummayyad dynasty's accounts using double entry book-keeping, apparently a form of 'secret knowledge'. — Preceding unsigned comment added by Mgrazebrook (talkcontribs) 12:09, 28 September 2015 (UTC)[reply]

Croatian invention

[edit]

@Filipz123: whether or not one considers the "invention" of double-entry bookkeeping to have occurred in ancient Muslim cultures ("an accounting system that applied a form of double-entry bookkeeping") or to have originated in Florence or Genoa in medieval times, there is no evidence or indication in the article that double-entry bookkeeping was invented in Croatia, only that Cotrugli was (one of) the first to document the system which was already in use throughout the region at the time. Please do not add Category:Croatian inventions back to this article as it is a miscategorization. Ivanvector 🍁 (talk) 19:09, 18 March 2016 (UTC)[reply]

[edit]

Hello fellow Wikipedians,

I have just modified one external link on Double-entry bookkeeping system. Please take a moment to review my edit. If you have any questions, or need the bot to ignore the links, or the page altogether, please visit this simple FaQ for additional information. I made the following changes:

When you have finished reviewing my changes, you may follow the instructions on the template below to fix any issues with the URLs.

This message was posted before February 2018. After February 2018, "External links modified" talk page sections are no longer generated or monitored by InternetArchiveBot. No special action is required regarding these talk page notices, other than regular verification using the archive tool instructions below. Editors have permission to delete these "External links modified" talk page sections if they want to de-clutter talk pages, but see the RfC before doing mass systematic removals. This message is updated dynamically through the template {{source check}} (last update: 5 June 2024).

  • If you have discovered URLs which were erroneously considered dead by the bot, you can report them with this tool.
  • If you found an error with any archives or the URLs themselves, you can fix them with this tool.

Cheers.—InternetArchiveBot (Report bug) 06:59, 13 September 2017 (UTC)[reply]

Were we all wrong?

[edit]

It seems that for centuries historians dealing with economy got it totally wrong!

According to the speculations of Mr Parker double entry bookkeeping was already flawlessly up and running in the early-medieval Middle East. What all this fuss about Pacioli, then? Magnagr (talk) 23:43, 29 April 2019 (UTC)[reply]

This part is all wrong. For god's sake, get a bookkeeper or an accountant to fix it. You must know someone.

[edit]

"In a normally credited account (an asset account, as opposed to a liability or equity account), debit to an account is an decrease in the total quantity of money or financial value, and a credit is a increase in that amount or value; these meanings reverse themselves when the account is normally debited. For example, a sale of $100 might require four entries: a $100 credit to an account called "Cash", which is an asset; a $100 debit to an account called "Revenue", which is a type of equity account and thus increases when it's debited; a $85 credit to the equity account "Revenue", which decreases it; and a $85 debit to Cost of Goods Sold, which is an expense account, which is a type of equity account. "

1) An asset account has a debit normal balance ... it is normally debited, not normally credited.

2) An asset account is increased by a debit, not by a credit.

3) If you sell something for $100 cash, the Cash account would be debited $100. Asset accounts are increased with debits, not credits.

4) A revenue account is increased by a credit, not by a debit. If you earn $100 revenue by selling something, you would credit a revenue account $100.

5) "Equity" is not increased when it is debited; it is increased when it is credited. Besides, an expense account has a different normal balance (debit) than does equity (credit). So you shouldn't treat an expense as if it is equity.

6) If you sell something for $100, you would increase revenue by $100. Okay. But why would you also try to decrease revenue by $85???? How did you lose revenue by selling that item for $100???? — Preceding unsigned comment added by 2603:9000:9006:7A97:20B5:FB81:C4C9:3FB3 (talk) 21:52, 14 September 2019 (UTC)[reply]

It's a bit of an oversimplified entry but it is correct. Normally you would debit cost of goods sold against a credit to an inventory asset, not revenue. But equity accounts are not expense accounts, revenue is not an asset, and ... yeah you're right, this is all kinds of bad. If nobody has already I'll take a look. Ivanvector (Talk/Edits) 14:53, 2 March 2020 (UTC)[reply]

Books of Accounts: ambiguous to wrong

[edit]

In what I've learned in the United States, a "nominal ledger account" is a temporary account (whose balance is zeroed-out at the end of the year), as opposed to a real ledger account, which is a permanent account (whose balance is carried over into next year). When using that sense of "nominal ledger account", much of the Books of Accounts section is wrong. For example, it is not only nominal ledger accounts that can be used in double-entry bookkeeping, so can real ledger accounts.

In fact, much of the Books of Accounts section is wrong even using the Traditional/British approach discussed in this very same Wikipedia article, just a bit above the section in question. The Traditional/British approach says there are 3 types of accounts: real, personal ,and nominal. And all 3 of those types can be used in double-entry bookkeeping. From the Traditional/British approach section ...

"Transactions are entered in the books of accounts by applying the following golden rules of accounting: 1. Real account: Debit what comes in and credit what goes out. 2. Personal account: Debit the receiver and credit the giver. 3. Nominal account: Debit all expenses & losses and credit all incomes & gains[ — Preceding unsigned comment added by 2603:9000:9006:7A97:8104:58C7:E201:96BC (talk) 00:13, 17 September 2019 (UTC)[reply]

Requested move 2 March 2020

[edit]
The following is a closed discussion of a requested move. Please do not modify it. Subsequent comments should be made in a new section on the talk page. Editors desiring to contest the closing decision should consider a move review after discussing it on the closer's talk page. No further edits should be made to this discussion.

The result of the move request was: Page moved. (closed by non-admin page mover) Jerm (talk) 16:11, 9 March 2020 (UTC)[reply]


Double-entry bookkeeping systemDouble-entry bookkeeping – Reverse the redirect, per WP:CONCISE94.21.238.148 (talk) 13:28, 2 March 2020 (UTC)[reply]

This is a contested technical request.Nnadigoodluck🇳🇬 14:02, 2 March 2020 (UTC)[reply]
The WP:FIRSTSENTENCE starts "Double-entry bookkeeping" (not ..."system") and there really is no need to say "system" everywhere. I changed The first sentence at single-entry bookkeeping to follow suit, but it just seems logical to prefer the shorter title. We don't have bookkeeping system or or Category:Bookkeeping systems for example, and Momentum accounting and triple-entry bookkeeping (to which Triple-entry bookkeeping redirects) manages without "system". We do have Accounting system but it targets Accounting software. 94.21.238.148 (talk) 14:29, 2 March 2020 (UTC)[reply]
As nom, I'd support the discussions being merged: I couldn't do that when listing them as technical requests. I guess it would require User:Ivanvector's consent as he has not commented at the other one. 94.21.238.148 (talk) 10:42, 3 March 2020 (UTC)[reply]

The above discussion is preserved as an archive of a requested move. Please do not modify it. Subsequent comments should be made in a new section on this talk page or in a move review. No further edits should be made to this section.

Ancient India double entry

[edit]

This sentence is not accurate: The Italian system has similarties with the older Indian "Jama–Nama" system which had debits and credits in a reverse order. B. M. Lall Nigam claims that the Italian merchants likely learned the method from their interaction with ancient Indian merchants from the sea trade.[3] When was that influence? Roman, medieval, modern? In the book quoted is written: "One unsubstantited is that double entry originated in India prior to Greek and Roman times in the form of the Bahi Khata system of bookkeeping still practised in most parts of India among the unincorporated entreprise. Indian traders took this system to Italy and from there double entry spread throughout Europe.

What is a Drawing account?

[edit]

Section Debits and credits refers twice to a Drawing account without ever giving a definition. --RedViking20200702 (talk) 15:25, 16 April 2021 (UTC)[reply]

It's a record of withdrawals, like if the owner takes money out of the business accounts for personal use. I added a wikilink to 'Withdrawal' in the article. MrOllie (talk) 15:32, 16 April 2021 (UTC)[reply]

History section

[edit]

This section misinterprets what references say. The claim that "Double-entry bookkeeping was firstly pioneered by the Romans and in the Jewish community of the early-medieval Middle East." is wrong. Here is source [[1]]. Parker does not say that Jewish community pioneered double entry bookkeeping. Rather what he says is that Islamic societies had sophisticated accounting system and it possibly influence Italians, trough Jewish intermediates, and contributed to development of Double-entry bookkeeping. Scorgie in another article [[2]] elaborated on this and states that "The evidence presented by Goitein [1966a] revealed that Medieval Jewish merchants and bankers in Old Cairo made up accounts which had a bilateral form and that their use of this form predated that of the Italians and other Europeans. " However he says that "However the evidence accumulated to date does not permit a case to be made which answers Parker's Question, i.e., is it possible to assert that accounting methods in the Moslem Empire were directly influential in the development of accounting in Italy? ".(p6)

Finally Christopher Nobes wrote the following article [[3]], where he criticized earlier research and states that "Finally, there is still no evidence that double entry was first developed outside Italy. At present, it still seems that it was Italians who were the authors of the earliest surviving records kept as full double-entry systems; Italians who wrote the earliest surviving descriptions of double entry; and, above all, it is insets of Italian records that the gradual evolution of the elements of double entry, towards a full system, can be seen in the 13th and 14th centuries."(p6)

As such I am gonna remove those claims, as they are unsupported, and mainstream sources still regard Italians as Inventors.

Another problem is the claim that "However, the double-entry accounting method was said to be developed independently earlier in Korea during the Goryeo dynasty (918–1392) when Kaesong was a center of trade and industry at that time. The Four-element bookkeeping system was said to originate in the 11th or 12th century". I've found the following article which elaborates on it [[4]]. This is up-to-date article published in academic journal. On page 107 they say that while some authors state that Korean method date back to 11th to 13th century there is no direct evidence for it. The earliest evidence is from 1780s. DMKR2005 (talk) 21:20, 13 June 2021 (UTC)[reply]

Need explanation of WHY double entry bookkeeping was invented

[edit]

There's nothing on this page on why double entry bookkeeping was even invented, it just assumes the reader knows the purpose for it. It also has no comparison with past systems prior to it. We don't need a massive discussion discussing everyone who claims to have come up with it. Ergzay (talk) 15:23, 21 January 2024 (UTC)[reply]

Error: Credit and Debit reversed

[edit]

In the intro section, for the example where a business borrows money, am I right that the credits and debits are mistakenly reversed? That is, the business should have a credit to cash and debit to loan payable. And the bank should have a debit to cash and credit to loan receivable. Stonkaments (talk) 06:15, 4 September 2024 (UTC)[reply]