51 lines
No EOL
2.7 KiB
Text
51 lines
No EOL
2.7 KiB
Text
{\rtf1\ansi\ansicpg1252\cocoartf949\cocoasubrtf460
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{\fonttbl\f0\fmodern\fcharset0 Courier;}
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{\colortbl;\red255\green255\blue255;}
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\pard\tx560\tx1120\tx1680\tx2240\tx2800\tx3360\tx3920\tx4480\tx5040\tx5600\tx6160\tx6720\sl264\slmult1\ql\qnatural\pardirnatural
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\f0\fs28 \cf0 Accountants will talk of ``credits'' and ``debits'', but the meaning\
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is often different from the layman's understanding. To avoid\
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confusion, Ledger uses only subtractions and additions, although the\
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underlying intent is the same as standard accounting principles.\
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\
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Recall that every posting will involve two or more accounts.\
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Money is transferred from one or more accounts to one or more other\
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accounts. To record the posting, an amount is @emph\{subtracted\}\
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from the source accounts, and @emph\{added\} to the target accounts.\
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\
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In order to write a Ledger transaction correctly, you must determine where\
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the money comes from and where it goes to. For example, when you are\
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paid a salary, you must add money to your bank account and also\
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subtract it from an income account:\
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\
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@smallexample\
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9/29 My Employer\
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Assets:Checking $500.00\
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Income:Salary $-500.00\
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@end smallexample\
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\
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Why is the Income a negative figure? When you look at the balance\
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totals for your ledger, you may be surprised to see that Expenses are\
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a positive figure, and Income is a negative figure. It may take some\
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getting used to, but to properly use a general ledger you must think\
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in terms of how money moves. Rather than Ledger ``fixing'' the minus\
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signs, let's understand why they are there.\
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\
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When you earn money, the money has to come from somewhere. Let's call\
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that somewhere ``society''. In order for society to give you an\
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income, you must take money away (withdraw) from society in order to\
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put it into (make a payment to) your bank. When you then spend that\
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money, it leaves your bank account (a withdrawal) and goes back to\
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society (a payment). This is why Income will appear negative---it\
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reflects the money you have drawn from society---and why Expenses will\
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be positive---it is the amount you've given back. These additions and\
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subtractions will always cancel each other out in the end, because you\
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don't have the ability to create new money: it must always come from\
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somewhere, and in the end must always leave. This is the beginning of\
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economy, after which the explanation gets terribly difficult.\
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\
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Based on that explanation, here's another way to look at your balance\
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report: every negative figure means that that account or person or\
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place has less money now than when you started your ledger; and every\
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positive figure means that that account or person or place has more\
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money now that when you started your ledger. Make sense?} |