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

[vicky_molokh]

OK, so, back to our hypothetical low-tech merchant. Just how much does he benefit from the invention?
He's likely the single owner of his own business, definitely with no shareholders (unless you count a possible partner or family involved in it). He's unlikely to have much in the way of the Liabilities account if he mostly deals with people who buy his stuff once or twice a year*; besides, Liabilities are prone to be associated with (Gasp!) Moneylenders.

On the other hand, I see it as a big deal when a single guild has some craftsmen, related merchants etc. and covers several related spheres of trade.

* == Yes, he has a lot of use for it if he's in the sort of business where keeping tabs is common.

[whswhs]

Originally Posted by vicky_molokh

OK, so, back to our hypothetical low-tech merchant. Just how much does he benefit from the invention?

The primary specified use is in identifying fraud. Detecting an employee who's defrauding you takes an Accounting roll. If you aren't using double-entry, you roll at -5, or at -2 if you have two separately kept single-entry records.

There aren't published rules for this, but I would say that if you want to make business plans, an Accounting roll can help you analyze things like revenue sources, uncontrolled costs, or cash flows, and thus pin down business decisions; treat this as complementary to Administration, Finance, or Merchant. For this, not having double-entry would be an automatic -5; the accounts that reflect changes in equity (revenues, expenses, and withdrawals) automatically sort out factors relevant to business decisions.

Bill Stoddard

[vicky_molokh]

Originally Posted by whswhs

The primary specified use is in identifying fraud. Detecting an employee who's defrauding you takes an Accounting roll. If you aren't using double-entry, you roll at -5, or at -2 if you have two separately kept single-entry records.

There aren't published rules for this, but I would say that if you want to make business plans, an Accounting roll can help you analyze things like revenue sources, uncontrolled costs, or cash flows, and thus pin down business decisions; treat this as complementary to Administration, Finance, or Merchant. For this, not having double-entry would be an automatic -5; the accounts that reflect changes in equity (revenues, expenses, and withdrawals) automatically sort out factors relevant to business decisions.

Bill Stoddard

Thanks, those are interesting considerations, and adventurer-relevant.
Hmm . . . 'be on the lookout for the upcoming Social Engineering Companion 1: Bureaucratic Adventures', heh. (Actually not that far-fetched concept given the last events of my campaign. Though I must point out that I picked low-tech in this thread to make things easier to understand, not because it has anything to do with the current setting.)

[Pursuivant]

Originally Posted by vicky_molokh

OK, so, back to our hypothetical low-tech merchant. Just how much does he benefit from the invention?

It depends on how big an operation he runs.

Does he lend money or sell on credit (even on a small scale)?

If so, double entry allows him to understand just how much money he can lend against his current assets (cash and property) or how much credit he can extend without going risking bankruptcy.

It also lets him figure out how much other people owe him a bit faster than with single-entry.

Does he speculate or owe money?

If so, double entry allows him to better "hedge his bets" because he knows how much he's got potentially coming in (profit) vs. overhead (money spent on capital and inventory) and debt.

Does he do a lot of business?

If so, double entry allows him to keep track of things like quarterly profits, who sold how much and when, etc.

In turn, that allows him to pick up on potential market trends or fraud.

At a basic level, for a small merchant, I could see double entry mostly being useful to keep track of inventory.

Say he's a blacksmith. He's got X amount of money in shop and tools, plus he's got Y monthly expenses in iron, fuel, guild dues, salaries, etc. If he just keeps track of what he buys and sells, he doesn't know exactly where his money is going for things like fees and salaries. If he turns raw iron and fuel into a value-added product, he doesn't necessarily remember that he made it until he sells it. If he sold something on credit, he just knows that he sold it, but might not remember that he's still owed some money for it.

[Anthony]

Originally Posted by Pursuivant

Does he lend money or sell on credit (even on a small scale)?

Speaking of which, modern concepts of loans, credit, etc, would be fairly radical (also run the risk of getting you in trouble, loaning money at interest was at various times illegal).