Dispensing with accounting periods, with nested ledgers.

Dispensing with accounting periods, with nested...

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Just a question to test my understanding.

Some accountancy software, such as hledger, allows nested accounts.  e.g. assets:fixed:plant:digger:AB01CDE

Normally in accounting, the year is split into periods and at the end of each accounting period, the contents of the expenses and sales accounts are transferred to the retained profits.

What is the reason why expenses and sales cannot just be sub-accounts of shareholderfunds:retainedprofit, and dispense with this transfer?

Thanks,

Chris.

Replies (8)

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By johngroganjga
28th Aug 2014 13:29

There is no reason, but you'd still have to zero all the income and expense accounts at the end of each year wouldn't you?

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By User deleted
28th Aug 2014 17:49

Why ...

... you would just lift out the movement between two dates to get your detailed P&L, you wouldn't need to zero them as they would already be there!

Sound like a great idea, but you would need some sort of date lock mechanism to freeze reported periods or it could get very messy.

I think such a system is the accountants Nirvana, it would make for extremely flexible reporting and what if analysis. You would just have one big long sausage of data for each category which you could look at over whatever time periods you wanted.

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Replying to danstopp1:
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By cparker87
28th Aug 2014 20:10

FYI

Old Greying Accountant wrote:

... you would just lift out the movement between two dates to get your detailed P&L, you wouldn't need to zero them as they would already be there!

Sound like a great idea, but you would need some sort of date lock mechanism to freeze reported periods or it could get very messy.

I think such a system is the accountants Nirvana, it would make for extremely flexible reporting and what if analysis. You would just have one big long sausage of data for each category which you could look at over whatever time periods you wanted.

VT and Xero can do this. I'd be surprised if many software pieces did the traditional 'T' account. After all, the P&L is just a filtered view of a data structure.

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By User deleted
29th Aug 2014 00:39

Why you picking on me ...

.... i was being sarcastic, John was the one who wants to do T accounts!

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Replying to DSG:
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By cparker87
29th Aug 2014 08:10

Sorry

Old Greying Accountant wrote:

.... i was being sarcastic, John was the one who wants to do T accounts!

Just know you're an IRIS fan - not picking on you just didn't think you'd know.

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By Philip Hoyle
29th Aug 2014 07:45

Quickbooks

Don't forget Quickbooks which also has open periods.  Probably the main reason why it was a strong competitor against Sage in the dark days when there weren't so many software packages around.  In decades of using accounting software, I've still not found anything as flexible as QB for its inbuilt reporting abilities.  Change of year end for "what if's" at the touch of a button, change between accruals and cash accounting at the touch of a button.

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By User deleted
29th Aug 2014 09:00

I use IRIS ...

... for final accounts, open minded on book-keeping, although I prefer SAGE and its T account approach mainly because I know how to get things done in it, although KashFlow is proving to be very good from what I have seen so far, but by no means thoroughly tested it yet.

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By chrisdew
15th Sep 2014 13:22

Thanks for your answers, I'm glad to see that this approach isn't considered beyond the pale.

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