141 lines
8.6 KiB
Markdown
141 lines
8.6 KiB
Markdown
ACCOUNTING GLOSSARY
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Accounting and bookkeeping represent an entire field of human effort and
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has evolved its own specialized vocabulary. Accounting hopes to
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summarize and 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
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an account type. Accounts are often organized into a heirarchy when it
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helps understanding. For example, a coffee shop might have Coffee,
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Merchandise, and Equipment as accounts but arranged under an Inventory
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account because different decisions are made on the total inventory
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rather than just coffee. A heirarchy can be part of the account name in
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Ledger, e.g., "Assets:Inventory:Coffee". Note that the Ledger software
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usually creates the list of accounts on the fly: accounts are created
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when transactions use them.
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**Account Type**: Each account has a type of Asset, Liability, Equity,
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Income, or Expense. Assets represent something owned, e.g., Cash or
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Inventory. Liabilities represent sometime owed, e.g., a Loan or
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Mortgage. Equity, also called capital, is everything owned minus
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everything owed (Assets - Liabilities). It is the financial measure of
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how much you are ahead. Income is money earned somewhere, which puts you
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more ahead. Expenses is money spent somewhere, which puts you less
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ahead. The type of account determines if a debit represents an increase
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or decrease in an account. For example, Inventory is an asset so a
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transcation debiting Inventory would increase its value. Assets and
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Expenses increase with debits and decrease with credits; Liabilities,
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Equity, and Expenses increase with credits and decrease with debits.
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**Journal**: A record of all the financial transactions of a person or
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firm. This data of where money goes can be collated into reports. This
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used to be done with a physical book, called a ledger, where each account
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was on one page. Each debit or credit in the journal was transfered to
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the appropriate account page and the pages were totalled to produce
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reports. This process is now done with the Ledger software which creates
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reports from 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
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transaction affects accounts and those effects are collated and totaled.
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The two most common reports are the balance sheet, which shows what is
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owned and owed on a specific date, and the cash flow statement, which
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shows how money was earned and spent over a period. The cash flow
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statement is also called a profit and loss statement or an income
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statement.
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**Transaction**: Our financial lives are recorded as a series of
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transactions. Each transaction has a specific date, an equal total of
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debits and credits affecting accounts, and some sort of description. For
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example, "On January 1, pay $100 with check #243 from Checking to
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Utilities for my Verizon phone bill" is a transaction. A credit of $100
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decreases my Checking asset, while a balancing debit of $100 increases my
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Utility expense. A transaction needs at least two *postings*, meaning
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account debits or credits, but can be as complicated as humans can make
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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 automated
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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 addidtional arguments
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or additional indented lines. The single letters *AbCDhIiNOoY* are aliased
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to other command directives, providing compatiblity 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
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track different resources and manage rules to convert between them. The
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system is flexible enough for the needs of very different users. Some
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track billable time, converting minutes and hours into dollars. Others
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track multiple currencies. Still others track the purchase and sale of
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stocks. Each commodity is seperate 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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**Journal File**: the text input file for ledger, sometimes called a
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register file. A journal file is a series of transactions, command
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directives, and comments. Command directives start with the single word
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name of the directive at the beginning of the line and include any
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following indented lines. Transactions start with a date a the beginning
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of the line and include any indented lines following. The journal file is
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expected to be 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`,
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`--forecast`, or `--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 Metadata**: a term for comments and tags annotating a
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transaction. Comments indented with a transaction will be stored with each
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posting of a transaction. Tags are words in comments followed by colons.
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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
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each posting. The state is usually set for an entire transaction at once
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with a mark after the date. The marks are ***** (cleared), **!**
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(pending), or no mark (uncleared). The interpretation of this state is up
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to the user, but is typically used in bank reconcilations or
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differentiating time worked versus billed. Ledger supports reports and
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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](
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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 as a regular posting but not required to balance debits and
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credits. It is often used to support
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[Fund Accounting](http://en.wikipedia.org/wiki/Fund_accounting) and various reports will collate and summarize virtual postings. Virtual postings should not be
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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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