[Help] Daily Life and Economics and Double-Entry Bookkeeping

[DCB]

Originally Posted by vicky_molokh

A while ago, Double-Entry Accounting was mentioned as one of the whack-on-the-head great inventions. Now, I've been reading the wiki and some other sites, as well as the replies in the original thread, and I'm still unsure how and what good comes out of it.

There's a podcast on its introduction here.

As I recall, the main effect was that it allowed detailed records to be kept, making it easier to conduct business in a data-driven manner (e.g., people are buying lots of X and not many of Y, so I should concentrate more on X).

The alternative at the time, IIRC, was to have a pile of goods and a bunch of money, and then a few months later to have a smaller pile of goods and a larger pile of money. That's fine as far as it goes, but provides limited scope to analyze&optimize.

[Rasmus Wagner]

Yeah, double-entry bookkeeping is way, way easier to analyze on than the "I wrote a list of all transactions" system.

[Forester]

Shouldn't try to answer accounting questions while half asleep. Will try again tomorrow.

[Flyndaran]

Originally Posted by Forester

Shouldn't try to answer accounting questions while half asleep. Will try again tomorrow.

Just remember to double count those sheep. And account for the depreciation of the wool.

[vicky_molokh]

I still find the Real(Funds), Real(Inventory), Nominal split more intuitive than the Real(all), Personal, Nominal split. (Annoyingly, searching the web for explanation results in exact same or very similar short paragraphs copied all over the place.)

[Ulzgoroth]

Originally Posted by vicky_molokh

I still find the Real(Funds), Real(Inventory), Nominal split more intuitive than the Real(all), Personal, Nominal split. (Annoyingly, searching the web for explanation results in exact same or very similar short paragraphs copied all over the place.)

Real (Funds) Real (Inventory) Nominal has no where to record the type of things that should go in Personal, though, unless you want to record monies owed and receivable in the same account as actual coin in hand.

[vicky_molokh]

Originally Posted by Ulzgoroth

Real (Funds) Real (Inventory) Nominal has no where to record the type of things that should go in Personal, though, unless you want to record monies owed and receivable in the same account as actual coin in hand.

But actual money in hand is coin/gold owned to you by the bank. That's kinda the point behind replacing coins with money - that you want the bank (or government) to store the gold and use paper banknotes as IOUs denoting this gold . . . right?

[Bruno]

Originally Posted by vicky_molokh

But actual money in hand is coin/gold owned to you by the bank. That's kinda the point behind replacing coins with money - that you want the bank (or government) to store the gold and use paper banknotes as IOUs denoting this gold . . . right?

Not any more. Our currency today is purely nominal. At least in most nations.

Fat chance taking American dollars down to Fort Knox and demanding gold, for example.

[Flyndaran]

Originally Posted by Bruno

Not any more. Our currency today is purely nominal. At least in most nations.

Fat chance taking American dollars down to Fort Knox and demanding gold, for example.

But with the F.D.I.C., your bank held money is insured, and little chance of the government going bankrupt and running off with your money like old timey kingdoms.

[jeff_wilson]

Originally Posted by Flyndaran

But with the F.D.I.C., your bank held money is insured, and little chance of the government going bankrupt and running off with your money like old timey kingdoms.

No; FDIC is government-backed insurance against the bank going broke.