151 lines
9.4 KiB
Markdown
151 lines
9.4 KiB
Markdown
ACCOUNTING GLOSSARY
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---
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Accounting and bookkeeping represent an entire field of human effort and has
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evolved its own specialized vocabulary. Accounting hopes to summarize and
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add understanding to where the money is going.
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**Account**: A category for grouping together amounts from similar
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transactions. Each account has a name, which is usually capitalized, and an
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account type. Accounts are often organized into a hierarchy when it helps
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understanding. For example, a coffee shop might have Coffee, Merchandise,
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and Equipment as accounts but arranged under an Inventory account because
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different decisions are made on the total inventory rather than just coffee.
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A hierarchy can be part of the account name in Ledger, e.g.,
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"Assets:Inventory:Coffee". Note that the Ledger software usually creates
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the list of accounts on the fly: accounts are created when transactions use
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them.
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**Account Type**: Each account has a type of Asset, Liability, Equity, Income,
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or Expense. Assets represent something owned, e.g., Cash or Inventory.
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Liabilities represent sometime owed, e.g., a Loan or Mortgage. Equity, also
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called capital, is everything owned minus everything owed (Assets -
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Liabilities). It is the financial measure of how much you are ahead.
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Income is money earned somewhere, which puts you more ahead. Expenses is
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money spent somewhere, which puts you less ahead. The type of account
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determines if a debit represents an increase or decrease in an account. For
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example, Inventory is an asset so a transaction debiting Inventory would
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increase its value. Assets and Expenses increase with debits and decrease
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with credits; Liabilities, Equity, and Expenses increase with credits and
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decrease with debits.
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**Journal**: A record of all the financial transactions of a person or firm.
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This data of where money goes can be collated into reports. This used to be
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done with a physical book, called a ledger, where each account was on one
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page. Each debit or credit in the journal was transferred to the
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appropriate account page and the pages were totaled to produce reports.
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This process is now done with the Ledger software which creates reports from
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the journal. A journal is sometimes called a register.
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**Posting**: A single debit or credit line of a transaction. A posting
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comprises an account and the debit or credit amount. It also inherits the
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shared description and date from the transaction. In the Ledger software,
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a posting may also have metadata and an account state.
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**Report**: A summary made from a journal of transactions. Each transaction
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affects accounts and those effects are collated and totaled. The two most
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common reports are the balance sheet, which shows what is owned and owed on
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a specific date, and the cash flow statement, which shows how money was
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earned and spent over a period. The cash flow statement is also called
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a profit and loss statement or an income statement.
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**Transaction**: Our financial lives are recorded as a series of transactions.
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Each transaction has a specific date, an equal total of debits and credits
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affecting accounts, and some sort of description. For example, "On January
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1, pay $100 with check #243 from Checking to Utilities for my Verizon phone
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bill" is a transaction. A credit of $100 decreases my Checking asset, while
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a balancing debit of $100 increases my Utility expense. A transaction needs
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at least two *postings*, meaning account debits or credits, but can be as
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complicated as humans can make finances.
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LEDGER GLOSSARY
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---
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The Ledger software also has its own terms.
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**Automated Transaction**: a command directive that modifies subsequent
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transactions that match an expression. An automated transaction can add
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additional postings to a transaction, add metadata, or change transaction
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amounts. Reports can be filter postings modified or generated by an
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automated transaction.
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[§ Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Automated-Transactions);
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[§ Concrete Example of Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Concrete-Example-of-Automated-Transactions)
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**Command Directive**: a command in a journal file to change how subsequent
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lines and transactions in a journal file are processed. Command directives
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control processing, set default values for subsequent accounts and
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transactions, or override parts of subsequent transactions. A directive
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line begins with name of the directive and may have additional arguments or
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additional indented lines. The single letters *AbCDhIiNOoY* are aliased to
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other command directives, providing compatibility with the ancient past.
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The characters **'='** and **'-'** are command directives for a automatic
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transactions and periodic transactions, respectively.
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[§ Command Directives](http://www.ledger-cli.org/3.0/doc/ledger3.html#Command-Directives)
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**Commodity**: any currency, stock, time or resource to be tracked
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numerically. While many people only track money in Ledger, Ledger can track
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different resources and manage rules to convert between them. The system is
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flexible enough for the needs of very different users. Some track billable
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time, converting minutes and hours into dollars. Others track multiple
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currencies. Still others track the purchase and sale of stocks. Each
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commodity is separate unless a conversion rule is given.
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[§ Commodities and Currencies](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodities-and-Currencies);
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[§ Currencies and Commodities](http://www.ledger-cli.org/3.0/doc/ledger3.html#Currency-and-Commodities);
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[§ Accounts and Inventories](http://www.ledger-cli.org/3.0/doc/ledger3.html#Accounts-and-Inventories);
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[§ Posting Cost](http://www.ledger-cli.org/3.0/doc/ledger3.html#Posting-cost)
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*(and next ten sections)*;
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[§ Commodity Reporting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodity-Reporting)
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**Effective Date**: an optional, second date information item in for a posting
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or transaction. Some use the effective date for when work is billed or when
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a check has cleared. The `--effective-date` option causes the effective
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date to override the transaction's initial date for that report.
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[§ Effective Dates](http://www.ledger-cli.org/3.0/doc/ledger3.html#Effective-Dates);
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**Journal File**: the text input file for ledger, sometimes called a register
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file. A journal file is a series of transactions, command directives, and
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comments. Command directives start with the single word name of the
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directive at the beginning of the line and include any following indented
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lines. Transactions start with a date a the beginning of the line and
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include any indented lines following. The journal file is expected to be
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encoded as ASCII or UTF-8 text.
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**Periodic Transaction**: the estimate of a transaction that would occur
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periodically, e.g., a monthly expense. These estimates are only used in
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budgeting and forecasting reports using the `--budget`, `--forecast`, or
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`--unbudgeted` options.
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[§ Budgeting and Forecasting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Budgeting-and-Forecasting)
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**Transaction Code**: an optional item in a transaction or posting often used
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to record a check number or bank code. Certain custom reports can report
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this code.
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[§ Codes](http://www.ledger-cli.org/3.0/doc/ledger3.html#Codes);
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[§ Format Expressions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Format-Expressions)
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**Transaction Metadata**: a term for comments and tags annotating
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a transaction. Comments indented with a transaction will be stored with
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each posting of a transaction. Tags are words in comments followed by
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colons. Tags can be used as filters in reports and certain tags, "Payee" or
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"Value", may affect fields of the transaction.
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[§ Metadata](http://www.ledger-cli.org/3.0/doc/ledger3.html#Metadata),
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[§ Applying Metadata to every matched posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-every-matched-posting),
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[§ Applying Metadata to the generated posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-the-generated-posting)
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**Transaction State**: a state of *cleared*, *pending*, or *uncleared* on each
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posting. The state is usually set for an entire transaction at once with
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a mark after the date. The marks are ***** (cleared), **!** (pending),
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or no mark (uncleared). The interpretation of this state is up to the user,
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but is typically used in bank reconciliations or differentiating time worked
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versus billed. Ledger supports reports and filters based on state.
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[§ Transaction State](http://www.ledger-cli.org/3.0/doc/ledger3.html#Transaction-state);
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[§ Cleared Report]( http://www.ledger-cli.org/3.0/doc/ledger3.html#Cleared-Report)
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**Virtual Posting**: an annotation posting in a transaction, similar in form
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as a regular posting but not required to balance debits and credits. It is
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often used to support
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[Fund Accounting](http://en.wikipedia.org/wiki/Fund_accounting) and various
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reports will collate and summarize virtual postings. Virtual postings
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should not be confused with virtual posting costs.
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[§ Virtual Postings](http://www.ledger-cli.org/3.0/doc/ledger3.html#Virtual-postings)
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[§ Working with Multiple Funds and Accounts](http://www.ledger-cli.org/3.0/doc/ledger3.html#Working-with-multiple-funds-and-accounts)
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