Hi Michael, I'd like to second Geoff's comments about your regular contributions to the list being not only interesting, but also very helpful.
My mother is a bookkeeper and she always reiterates how important it is to know why you are doing something in principle before attempting to do it electronically. Your paper-to-computer explanations do this by helping us all remember and understand the fundamentals underpinning our electronic accounts systems, so we can therefore find the appropriate accompanying functionality in Gnucash (whereas in other tutorials for other programs you mostly get 'how' to force your numbers into the system in order to make them 'fit' and 'appear' correctly. Kind regards, Clare Vanessa (Chapman) Freelance Web Designer & Copywriter e: cont...@clarevanessa.com.au p: 61 (0) 2 6644 9869 w: www.clarevanessa.com.au -----Original Message----- RE: Thank You Michael D Novack (Geoff)Date: Wed, 8 May 2024 11:24:28 +1000 From: Geoff <cleanoutmys...@gmail.com> To: stepbystepf...@comcast.net, gnucash-user@gnucash.org Subject: [GNC] Thank You Michael D Novack Message-ID: <9fc6f698-196f-4cda-a445-40c0eba46...@gmail.com> Content-Type: text/plain; charset=UTF-8; format=flowed Hello Michael Thank you very much for this little history lesson and your many other erudite responses on this mailing list. I always look forward to reading your answers knowing that I will both be entertained and learn something new. I particularly enjoy the way you often relate seemingly abstract concepts back to physical objects like paper ledgers and the ink entries therein. Thanks again for sharing. :--)) Regards Geoff ===== On 6/05/2024 12:44 am, Michael or Penny Novack wrote: > On 5/4/2024 10:53 PM, flywire wrote: >> David, the? guide even warns that accounting debits and credits are >> used contrary to the way most people understand them. The average >> punter will be wrong, and if they get it right the next punter will >> likely bet they are wrong. > > Yes, depends on perspective, your point of view or the bank's. > > But also? and explaining where YOUR point of view comes from (the origin > of the terms) think of who in say 1200 CE would be needing to keep > books. What sort of business would you be in? A moneylender, of course. > And keep in mind that in 1200 in Europe, if literate, probably Latin not > a strange language (especially not when dealing across multiple local > languages). > > Debit comes from "he owes" (me). In other words, your assets are debts > owed to you as well as cash on hand available to be loaned out. Thus the > money you have on deposit at some bank is a debit because the bank owes > you that money. > > Credit comes from "he trusts" (me). In other words, your liabilities. > Money you owe somebody else that they are trusting you can pay back. > It's why on the statement from the bank your account balance is a credit > (you are trusting the bank will give you this money of you ask for it) > but in your books a debit because the bank owes this money to you. > > Initially (way back then) there were no special accounts of type > "income" and "expense" so the other side of a transaction we would call > income or expense was equity. Immediately entered against equity. That > made it easy to see at any moment what to see what total equity was but > hard to look up the totals for any particular expense. Had to do work to > answer questions like "how much was our interest income last month?" > (remember, we are moneylenders). So a couple hundred years ago (I don;t > know exactly when) somebody got the bright idea to have TEMPORARY > accounts of type "income" and "expense" of fundamental type "equity". > Instead of the other side of the transactions immediately being main > equity use these "temporarily" and only every so often transfer to main > equity through a process known as "close thew books" with this process, > along the way, creating a report called "profit and loss" << originally > this was another temporary account, closed to equity by the net profit > or loss amount >> > > BTW, a moneylender WOULD be wanting to have liabilities. These would > have come into being by exchange with another moneylender in some other > town/country. These documents were useful in TRADE, serving as a way of > transporting money without the risk of bandits stealing the gold or > silver money on the way. You are a moneylender in place A. A merchant > planning to travel to B might come to you and ask "Do you have a debt > document from a moneylender in B?" If you did, you could sell him that > debt (endorse it over to him) collecting a fee for the service. He then > could travel to B and present it there for payment. Useless for a bandit > to steal as it wasn't made out "pay to the bearer" but "pay to some > specific person" (the merchant). > > Note something here. If two banks are exchanging these IOU's no silver > or gold has changed hands. Who says that the silver or gold has to > actually exist? In other words, these banks have created money and all > will be well only as long as they have enough gold and silver on hand to > pay out when any of these IOU's are presented. Does the term "he trusts" > make more sense now? There was no FDIC guaranteeing the deposits. That > is a very recent change. A hundred years ago you WERE trusting that the > bank could give you back what you had on deposit there. > > Michael D Novack > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
