ACCOUNTING GLOSSARY
---

   Accounting and bookkeeping represent an entire field of human effort and
   has evolved its own specialized vocabulary.  Accounting hopes to
   summarize and add understanding to where the money is going.

**Account**: A category for grouping together amounts from similar
  transactions.  Each account has a name, which is usually capitalized, and
  an account type.  Accounts are often organized into a heirarchy when it
  helps understanding.  For example, a coffee shop might have Coffee,
  Merchandise, and Equipment as accounts but arranged under an Inventory
  account because different decisions are made on the total inventory
  rather than just coffee.  A heirarchy can be part of the account name in
  Ledger, e.g., "Assets:Inventory:Coffee".  Note that the Ledger software
  usually creates the list of accounts on the fly: accounts are created
  when transactions use them.

**Account Type**: Each account has a type of Asset, Liability, Equity,
  Income, or Expense.  Assets represent something owned, e.g., Cash or
  Inventory.  Liabilities represent sometime owed, e.g., a Loan or
  Mortgage.  Equity, also called capital, is everything owned minus
  everything owed (Assets - Liabilities).  It is the financial measure of
  how much you are ahead.  Income is money earned somewhere, which puts you
  more ahead.  Expenses is money spent somewhere, which puts you less
  ahead.  The type of account determines if a debit represents an increase
  or decrease in an account.  For example, Inventory is an asset so a
  transcation debiting Inventory would increase its value.  Assets and
  Expenses increase with debits and decrease with credits; Liabilities,
  Equity, and Expenses increase with credits and decrease with debits.

**Journal**: A record of all the financial transactions of a person or
  firm.  This data of where money goes can be collated into reports.  This
  used to be done with a physical book, called a ledger, where each account
  was on one page.  Each debit or credit in the journal was transfered to
  the appropriate account page and the pages were totalled to produce
  reports.  This process is now done with the Ledger software which creates
  reports from the journal.  A journal is sometimes called a register.

**Posting**: A single debit or credit line of a transaction.  A posting
comprises an account and the debit or credit amount.  It also inherits the
shared description and date from the transaction.  In the Ledger software,
a posting may also have metadata and an account state.


**Report**: A summary made from a journal of transactions.  Each
  transaction affects accounts and those effects are collated and totaled.
  The two most common reports are the balance sheet, which shows what is
  owned and owed on a specific date, and the cash flow statement, which
  shows how money was earned and spent over a period.  The cash flow
  statement is also called a profit and loss statement or an income
  statement.

**Transaction**: Our financial lives are recorded as a series of
  transactions.  Each transaction has a specific date, an equal total of
  debits and credits affecting accounts, and some sort of description.  For
  example, "On January 1, pay $100 with check #243 from Checking to
  Utilities for my Verizon phone bill" is a transaction.  A credit of $100
  decreases my Checking asset, while a balancing debit of $100 increases my
  Utility expense.  A transaction needs at least two *postings*, meaning
  account debits or credits, but can be as complicated as humans can make
  finances.

LEDGER GLOSSARY
---

The Ledger software also has its own terms.

**Automated Transaction**: a command directive that modifies subsequent
  transactions that match an expression.  An automated transaction can add
  additional postings to a transaction, add metadata, or change transaction
  amounts.  Reports can be filter postings modified or generated by an automated
  transaction.
  [&sect; Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Automated-Transactions);
  [&sect; Concrete Example of Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Concrete-Example-of-Automated-Transactions)

**Command Directive**: a command in a journal file to change how subsequent
lines and transactions in a journal file are processed.  Command directives
control processing, set default values for subsequent accounts and
transactions, or override parts of subsequent transactions.  A directive
line begins with name of the directive and may have addidtional arguments
or additional indented lines.  The single letters *AbCDhIiNOoY* are aliased
to other command directives, providing compatiblity with the ancient past.
The characters **'='** and **'-'** are command directives for a automatic
transactions and periodic transactions, respectively.
[&sect; Command Directives](http://www.ledger-cli.org/3.0/doc/ledger3.html#Command-Directives)

**Commodity**: any currency, stock, time or resource to be tracked
  numerically.  While many people only track money in Ledger, Ledger can
  track different resources and manage rules to convert between them.  The
  system is flexible enough for the needs of very different users.  Some
  track billable time, converting minutes and hours into dollars.  Others
  track multiple currencies.  Still others track the purchase and sale of
  stocks.  Each commodity is seperate unless a conversion rule is given.
  [&sect; Commodities and Currencies](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodities-and-Currencies);
  [&sect; Currencies and Commodities](http://www.ledger-cli.org/3.0/doc/ledger3.html#Currency-and-Commodities);
  [&sect; Accounts and Inventories](http://www.ledger-cli.org/3.0/doc/ledger3.html#Accounts-and-Inventories);
  [&sect; Posting Cost](http://www.ledger-cli.org/3.0/doc/ledger3.html#Posting-cost)
  *(and next ten sections)*;
  [&sect; Commodity Reporting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodity-Reporting)

**Effective Date**: an optional, second date information item in for a
posting or transaction.  Some use the effective date for when work is
billed or when a check has cleared.  The `--effective-date` option causes
the effective date to override the transaction's initial date for that
report.
[&sect; Effective Dates](http://www.ledger-cli.org/3.0/doc/ledger3.html#Effective-Dates);

**Journal File**: the text input file for ledger, sometimes called a
register file.  A journal file is a series of transactions, command
directives, and comments.  Command directives start with the single word
name of the directive at the beginning of the line and include any
following indented lines.  Transactions start with a date a the beginning
of the line and include any indented lines following.  The journal file is
expected to be encoded as ASCII or utf-8 text.

**Periodic Transaction**: the estimate of a transaction that would occur
  periodically, e.g., a monthly expense.  These estimates are only used in
  budgeting and forecasting reports using the `--budget`,
  `--forecast`, or `--unbudgeted` options.
  [&sect; Budgeting and Forecasting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Budgeting-and-Forecasting)

**Transaction Code**: an optional item in a transaction or posting often
  used to record a check number or bank code.  Certain custom reports can
  report this code.
  [&sect; Codes](http://www.ledger-cli.org/3.0/doc/ledger3.html#Codes);
  [&sect; Format Expressions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Format-Expressions)

**Transaction Metadata**: a term for comments and tags annotating a
transaction.  Comments indented with a transaction will be stored with each
posting of a transaction.  Tags are words in comments followed by colons.
Tags can be used as filters in reports and certain tags, "Payee" or
"Value", may affect fields of the transaction.
[&sect; Metadata](http://www.ledger-cli.org/3.0/doc/ledger3.html#Metadata),
[&sect; Applying Metadata to every matched posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-every-matched-posting),
[&sect; Applying Metadata to the generated posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-the-generated-posting)

**Transaction State**: a state of *cleared*, *pending*, or *uncleared* on
each posting.  The state is usually set for an entire transaction at once
with a mark after the date.  The marks are **&#42;** (cleared), **!**
(pending), or no mark (uncleared).  The interpretation of this state is up
to the user, but is typically used in bank reconcilations or
differentiating time worked versus billed.  Ledger supports reports and
filters based on state.
[&sect; Transaction State](http://www.ledger-cli.org/3.0/doc/ledger3.html#Transaction-state);
[&sect; Cleared Report](
http://www.ledger-cli.org/3.0/doc/ledger3.html#Cleared-Report)

**Virtual Posting**: an annotation posting in a transaction, similar in form as a regular posting but not required to balance debits and
credits.   It is often used to support
[Fund Accounting](http://en.wikipedia.org/wiki/Fund_accounting) and various reports will collate and summarize virtual postings.  Virtual postings should not be
confused with virtual posting costs.
[&sect; Virtual Postings](http://www.ledger-cli.org/3.0/doc/ledger3.html#Virtual-postings)
[&sect; Working with Multiple Funds and Accounts](http://www.ledger-cli.org/3.0/doc/ledger3.html#Working-with-multiple-funds-and-accounts)
