Accounting

Plain text accounting

accounting is tracking the flow of valuable commodities, such as money or time. It clarifies activity, priorities, obligations, opportunities. It can reduce stress and even be enjoyable.

double-entry bookkeeping is a process for doing this reliably. For every movement of value (a transaction), both the source and destination are recorded. Simple arithmetic invariants help prevent errors.

In traditional double-entry bookkeeping, value at any point in time is tracked in various accounts, classified as asset (owned), liability (owed) or equity (invested). Two more classifications track changes during some period: revenues (inflows) and expenses (outflows).

Transactions consist of debits (increases to asset or expense accounts, or decreases to liability or equity accounts) or credits (decreases to asset or expense accounts, or increases to liability or equity accounts).