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Treatment of debits and credits in accounting software

I am currently working with a financial application which reports debits as minus and credits as plus. I am prepared to accept that provided it does this consistently then there is no issue, but I don't recall any other apps that display debits and credits using this convention. Does anyone have any other examples of financial applications that use strange conventions for displaying debits and credits?
Alastair Harris

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27th Jul 2006 15:54

mnemonicc
Debit
Asset
Loss
Expenditure

Credit
Liability
Income
Profit

looking at it that way + and - seem a little strange

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By Anonymous
28th Jul 2006 07:56

alternative method ....
Basically it depends upon the transaction type as to how it is signed (or translated).

Another method is to have everything unsigned and rely purely upon Transation Type to determine how it is handled - i.e.

'-----------------------------------------
' ledger transaction types
'-----------------------------------------
Public Enum eGLTransaction
glBankReceipt = 1
glBankPayment = 2

glJournalDebit = 5
glJournalCredit = 6

glSalesInvoice = 7
glSalesReceipt = 8

etc ........ you get approach
End Enum

Ultimately it really doesnt matter to the application provided consistency is the key.

The problem arises when 'users' try to go behind the scenes and extract data from the underlying Db. Most apps are not really designed to have direct access to the Db except via some from of front end (report writer) which probably handles the translation issues for you; yes physically you can attach to the Db but then you are on your own

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28th Jul 2006 11:30

If I were a betting man...
Hi Alastair

As this is so unusual I would be willing to bet a shilling that there is a switch somewhere in the company setup that enables one to chose! What is it that your are using; perhaps another user will be able to help if they know.

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27th Jul 2006 12:30

It all goes to prove . . .

. . . what accountants have always known - a set of accounts add up to a big fat zero !

David

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28th Jul 2006 13:52

Banks' Point Of View
A very elderly lecturer from the quill and parchment era once informed me that what we now call single entry bookkeeping was in his day regarded as a form of double entry because it has its corresponding debits and credits in the bank statement.

Doesn't your convention simply view thing from a bank's viewpoint: a debit account is certainly a minus from where your bank manager is sat.

Is your software some freebie distribution from your bank?

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28th Jul 2006 17:25

Plus and minus are used in most parts of Quickbooks......
...and some parts of TAS Books. The programmers, in all their infinite stupidity, think that +/- is clearer than DR/CR when non-accountants are using the software. When will software writers learn that when they apply their ignorance to accountancy they actually make things more complicated, not less?

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28th Jul 2006 16:37

hi Andrew
In fact the system in question is a core banking system, which indeed explains why the signs are wrong (or right depending on your viewpoint). And debate with the suppliers sparks a discussion about Nostro's - very strange! BUT I am still interested to know if anyone has come across this in other areas?

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27th Jul 2006 10:37

Well..
It seems a bit weird - I suppose in truth one is positive and one is negative, so that the machine can distinguish, but surely the point of double entry is that there are two positive entries.

As an example, Debits in the P&L would make sense, because they're expenditure, but debits in the balance sheet are assets, so negatives would look a bit odd.

does it produce all figures this way? I would have thought that for reporting purposes it would be better to wallop it into excel and get excel to format it into two columns of positive figures.

If the software just produces a one column TB, then positives and negatives would make sense, and I don't suppose it would make any difference which way round they were..

Not sure if that helps!

Paul

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By frauke
28th Jul 2006 16:55

debits and credits
I started out my professional life as a "Banker" and debits were minus, and credits a plus.

When I did my first bookkeeping course I was amazed to find in bookkeeping it was the other way round!

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By neileg
27th Jul 2006 11:27

Convention
There is a convention that debits are positive and credits are negative, but it's no more than that. Providing the program is consitent, the logic works just as well if the convention is reversed.

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