ledger/ledger.texi

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@comment $Id: ledger.texi,v 1.5 2003/10/01 21:55:40 johnw Exp $
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@setfilename ledger.info

@settitle Ledger Accouting Tool
@syncodeindex pg cp
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@dircategory Ledger Accouting Tool
@direntry
* ledger:    (ledger)The Ledger Accouting Tool.
@end direntry

@titlepage
@title Ledger Accouting Tool
@author John Wiegley <@email{johnw@@newartisans.com}>
@page
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@contents

@ifnottex
@node Top
@top Ledger Accouting Tool

@c @insertcopying
@end ifnottex

@chapter Introduction

@code{ledger} is an accouting tool that has the chutzpah to exist.  It
provides not one bell or whistle for the money, and returns the user
back to the days before user interfaces were even a twinkle on their
father's CRT.

What it does do is provide a double-entry accouting ledger with all of
the flexibility and muscle of its modern day cousins---without any of
the fat.  Think of it as the bran muffin of accouting tools.

To begin with, you need to start keeping a ledger.  This is the basis
of all accouting, and if you don't know how to do it, now is the time
to learn.  The little booklet that comes with your checkbook is a
ledger, so we'll describe double-entry accouting in terms of that.

A checkbook ledger records debits (subtractions, or withdrawals) and
credits (additions, or deposits) with reference to a single account:
your checking account.  Where the money comes from, and where it goes
to, are simply described in the memo field where you write the person
or the company's name.  The ultimate aim of keeping a checkbook ledger
is so you know how much money is available to spend at all times.
That is really the aim of all ledgers.

What computers add is the ability to walk through all of those
transactions and tell you things about your spending habits; let you
devise budgets to get control over your spending; squirrel away money
into virtual savings account without having to physically move the
money around; etc.  As you keep your checkbook ledger, you are
recording a lot of information about your life and your habits, and
sometimes that information can tell you things you aren't even aware
of.  That is the aim of all good accouting tools.

The next step up from a checkbook ledger is a ledger that covers all
of your accounts, not just your checking account.  In this ledger, you
write not only who the money goes to---in the case of a debit---but
where the money is coming from.  In the checkbook ledger, its assumed
that all of the money is coming from your checking account.  But in a
general ledger, you have to write two-lines: The source and target.
There must always be a debit from some account for any credit made to
anyone else.  This is what is meant by ``double-entry'' accouting.

For example, let's say you have a checking account and a brokerage
account, and that you can write checks from both of them.  Rather than
keeping two checkbooks, you decide to use one ledger for both.  Once
you get the hang of this, you'll be ready to use one ledger for all of
your accouting needs, which gets you to the point of this
introduction.

So in your general ledger, you need to pay Pacific Bell Telephone for
your monthly phone bill.  The cost is $23.00.  In a checkbook ledger,
you would write out a line that credits your account with Pacific Bell
by $23 as follows:

@example
9/29  100  Pacific Bell                        $23.00     $77.00
@end example

Very simple: You've written check #100 for $23 to Pacific Bell, which
leaves your balance in checking at $77.

But in a general ledger, you need to say where the money is coming
from.  A general ledger entry would look like this:

@example
9/29  100  Pacific Bell                        $23.00    $223.00
	   Checking                           $-23.00     $77.00
@end example

What does all of this mean?  The first line shows a credit (or
payment) to Pacific Bell to the tune of $23.00.  Then, because there
is no one ``balance'' in a general ledger, we've written in the total
balance of your payments to the account ``Pacific Bell''.  This was
done by looking at the last entry for ``Pacific Bell'' in the general
ledger, adding $23.00 to that amount, and writing in the total in the
balance column.

Secondly, the money is coming from your ``Checking'' account, which
means a debit (or withdrawal) of $23.00, which will leave the ending
balance in your ``Checking'' account at $77.00.

The transaction itself must balance to $0: $23 goes to Pacific Bell,
$23 comes from Checking: there is nothing left over to be accounted
for.  The money has in fact moved from one account to another.  This
is basis of double-entry accounting: That money never pops out of
existence, it is always described as a transaction between
accounts---as a flow from one place to another.

Keeping a general ledger is the same as keeping two separate ledgers:
One for Pacific Bell and one for Checking.  In that case, each time
you write a credit into one, you write a corresponding debit into the
other.  This makes it much easier to write in the running balance,
since you don't have to go looking back for the last time an account
was referenced, but it also means having a lot of ledger books if you
deal with multiple accounts.

Enter the beauty of a computerized accouting tool.  The purpose of
@code{ledger} is to make general ledger accouting simple by keeping
track of the balances for you.  Your only job is to enter credit/debit
pairs and make sure they balance.  If a transaction does not balance,
@code{ledger} will display an error and ignore the
transaction.@footnote{In some special cases, it will automatically
balance the entry for you.}

Your usage of @code{ledger} will have two parts: Keeping the ledger,
and using the @code{ledger} tool to provide you with information
summaries derived from your ledger's entries.

@chapter Keeping a ledger

The most important part of accounting is keeping a good ledger.  If
you have a good ledger, tools can be written to work whatever
mathematically tricks you need to better understand your spending
patterns.  Without a good ledger, no tool, however smart, can help
you.

The @code{ledger} program aims at making ledger entry as simple as
possible.  Since it is a command-line tool, it does not provide a user
interface for keeping a ledger.  If you like, you may use
@code{gnucash} to maintain your ledger, in which case the
@code{ledger} program will read @code{gnucash}'s data files directly.
In that case, read the @code{gnucash} manual now, and skip to the next
chapter.

If you are not using @code{gnucash}, but a text editor to maintain
your ledger, read on.  @code{ledger} has been designed to make data
entry as simple as possible, by keeping the ledger format easy, and
also by automagically determining as much information as possible
based on the nature of your entries.

For example, you do not need to tell @code{ledger} about the accounts
you use.  Any time @code{ledger} sees a debit or a credit to an
account it knows nothing about, it will create it.  If you use a
commodity that is new to @code{ledger}, it will create that commodity,
and determine its display characteristics (placement of the symbol
before or after the amount, display precision, etc) based on how you
used the commodity in the transaction.

Here is the Pacific Bell example from above, given as a @code{ledger}
transaction:

@example
9/29  (100)  Pacific Bell
    Expenses:Utilities:Telephone               $23.00
    Assets:Checking                           $-23.00
@end example

As you can see, it is very similar to what would be written on paper,
minus the computed balance totals, and adding in account names that
work better with @code{ledger}'s scheme of things.  In fact, since
@code{ledger} is smart about many things, you don't need to specify
the balanced amount, if it is the same as the first line:

@example
9/29  (100)  Pacific Bell
    Expenses:Utilities:Telephone               $23.00
    Assets:Checking
@end example

For this entry, @code{ledger} will figure out that $-23.00 must come
from ``Assets:Checking'' in order to balance the entry.

@section Commodities and currencies

@code{ledger} makes no assumptions about the commodities you use.  It
only requires that you specify which commodity.  The commodity may be
any non-numeric string that does not contain a period, comma, forward
slash or at sign (@@).  Here are some valid commodity specifiers:

@example
$20.00         ; twenty US dollars
20 USD         ; the same
AAPL 40        ; 40 shares of Apple Computer stock
DM 60          ; 60 Deutsch Mark
<EFBFBD>50            ; 50 British pounds
@end example

@code{ledger} will examine the first use of any commodity to determine
how that commodity should be printed on reports.  It pays attention to
whether the name of commodity was separated from the amount, whether
it came before or after, the precision used in specifying the amount,
whether thousand marks were used, etc.  This is done so that printing
the commodity looks the same as the way you use it.

An account may contain multiple commodities, in which case it will
have separate totals for each.  For example, if your brokage account
contains both cash, gold, and several stock quantities, the balance
might look like:

@example
  $200.00
100.00 AU
  AAPL 40
 BORL 100
 FEQTX 50  Assets:Brokerage
@end example

This balance report shows how much of each commodity is in your
brokerage account.

Sometimes, you will want to know the current street value of your
balance, and not the commodity totals.  For this to happen, you must
specify what the current price is for each commodity.  The price can
be in any commodity, in which case the balance will be computed in
terms of that commodity.  The usual way to specify prices is with a
file of price settings, which might look like this:

@example
AU=$357.00
AAPL=$37
BORL=$19
FEQTX=$32
@end example

Specify the prices file using the @samp{-p} option:

@example
/home/johnw $ ledger -f ledger.dat -p prices.db balance brokerage
@end example

Now the balance for your brokerage account will be given in US
dollars, since the prices database has specified conversion factors
from each commodity into dollars:

@example
$40880.00  Assets:Brokerage
@end example

You can convert from any commodity to any other commodity.  Let's say
you had $5000 in your checking account, and for whatever reason you
wanted to know many ounces of gold that would buy.  If gold is
currently $357 per ounce, then each dollar is worth 1/357 AU:

@example
/home/johnw $ ledger -f ledger.dat -p "\$=0.00280112 AU" balance checking
@end example

@example
14.01 AU  Assets:Checking
@end example

$5000 would buy 14 ounces of gold, which becomes the new display
commodity since a conversion factor was provided.

Commodities conversions can also be chained, up to a depth of 10.
Here is a sample prices database that uses chaining:

@example
AAPL=$15
$=0.00280112 AU
AU=300 Euro
Euro=DM 0.75
@end example

This is a roundabout way of reporting AAPL shares in their Deutsch
Mark equivalent.

@section Accounts and Inventories

Since @code{ledger}'s accounts and commodity system is so flexible,
you can have accounts that don't really exist, and use commodities
that no one else recognizes.  For example, let's say you are buying
and selling various items in EverQuest, and want to keep track of them
using a ledger.  Just add items of whatever quantity you wish into
your EverQuest account:

@example
9/29  Get some stuff at the Inn
    Places:Black's Tavern                   -3 Apples
    Places:Black's Tavern                   -5 Steaks
    EverQuest:Inventory
@end example

Now your EverQuest:Inventory has 3 apples and 5 steaks in it.  The
amounts are negative, because you are taking @emph{from} Black's
Tavern in order to credit your Inventory account.  Note that you don't
have to use ``Places:Black's Tavern'' as the source account.  You
could use ``EverQuest:System'' to represent the fact that you acquired
them online.  The only purpose for choosing one kind of source account
over another is for generate more informative reports later on.  The
more you know, the better analysis you can perform.

If you later sell some of these items to another player, the entry
would look like:

@example
10/2  Sturm Brightblade
    EverQuest:Inventory                     -2 Steaks
    EverQuest:Inventory                     15 Gold
@end example

Now you've turned 2 steaks into 15 gold, courtesy of your customer,
Sturm Brightblade.

Note that if you're playing on a system where ``Gold'' is the standard
currency, you should use the @samp{-D} flag to tell @code{ledger} that
that is the default commodity.

@chapter Using @code{ledger}

@chapter Computing Huq<75>qu'll<6C>h

As a Bah<61>'<27>, I need to compute Huq<75>qu'll<6C>h on some of my assets.  The
exact details of this matter are rather complex, so if you have any
interest, I encourage you to do research on the Web.

For any fellow Bah<61>'<27>s out there who want to track Huq<75>qu'll<6C>h, the
@code{ledger} tool makes this extraordinarily easy.  Just too easy, in
fact.  Here's all you have to do: If an expense is exempt from
Huq<EFBFBD>qu'll<6C>h---a ``necessary'' expense---put an exclamation mark befroe
the account name:

@example
2002.12.31  Rent
   !Expenses:Rent                      $450.00
    Assets:Checking                   $-450.00
@end example

Even easier than that, simply put a list of regular expressions that
match the categories you consider exempt in a file called
@file{.huquq}, and the special marking will be done for you.  Here is
the file I use:

@example
^Income:
^Retirement:
^Expenses:Rent
^Expenses:Taxes
@end example

When you're ready to pay Huq<75>qu'll<6C>h, just write the check to the
account ``Huququ'llah'' (no accents, one apostrophe):

@example
2003.01.20 * (101)  Baha'i Huququ'llah Trust
    Huququ'llah                      $1,000.00
    Assets:Checking                 $-1,000.00
@end example

That's it.  To see how much Huq<75>q is currently owed based on your
ledger data, type:

@example
/home/johnw $ ledger -f ledger.dat balance huquq
@end example

Not sure if you should pay yet?  Go to your newspaper, or look on the
Web, and find the current price of gold per ounce.  Then pass this
figure to the @samp{-G} option.  If it were $357.10, you would use:

@example
/home/johnw $ ledger -f ledger.dat balance -G 357.10 huquq
@end example

Now your balance report will be given in mi@underline{th}q<>ls of gold,
not dollars.  If the balance on your Huq<75>qu'll<6C>h account is more than
-19 mi@underline{th}q<>ls (remember, it is a liability account, so
amounts are negative), then get out your checkbook.

@bye