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Accountants logic?

25th Sep 2014
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The Accruals Process

Gone Sailing PM | Wed, 24/09/2014 - 14:48 | Permalink
jefflcbba wrote:

But really the problem is double entry book keeping: it is so open to relatively simple abuse.

Double entry bookkeeping has lasted 500 years, it's fine.

The above is a comment from "Gone Sailing" following the article on Tesco's recent accounting "abuse".

In business there is an expression "timing is everything", which is perhaps pertinent on how Tesco has handled its accruals.

This is what is wrong with double entry-bookkeeping------it is two dimensional in a holistic world. Does "Gone Sailing" navigate with a flat-earth map?

By his logic we should take on IS using swords, there should be a charge in central London for clearing horse-shit (instead of pollution) and we should go back to carrier pigeons as the most efficient means of long distance communication.

Come on guys, it is time to drop double-entry bookkeeping as a method of accounting and replace it with some combination of Econometrics and cashflow!

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By flurrymc
26th Sep 2014 12:11

Well der!

I don’t know about Gone Sailing, but personally I use a flat earth map to navigate.  Unless you are a long haul airline pilot, a maritime navigator or an astronaut then I bet you do as well.  Even satnavs show a flat earth approximation.  Charts of coastal waters are certainly flat earth maps.

Come on, old chap. don’t throw the baby out with the bathwater, double entry bookkeeping is still a valuable tool for establishing how a business is progressing. 

 

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By tom123
27th Sep 2014 10:03

When at University

I remember when I first saw double entry bookkeeping at university - it seemed so random. My first attempt at journals, I couldn't see why they needed two sides.

 

Now - I think I would struggle to think in any other way.

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By raybackler
30th Oct 2014 14:02

Paying your credit card bill

If you see the money going out of your bank account for this the other half of the double entry is the payment arriving on your credit card statement.  Double entry bookkeeping is no more than that and it is 100% accurate when done properly.

If the payment doesn't show on the bank statement it means you haven't confirmed it or something has gone wrong at the bank.  If the payment doesn't appear on your credit card statement you know something has gone wrong at the credit card company or you used the wrong reference on the payment.  What could be simpler than that?

When the double entry works it is the ultimate control.  When it doesn't work it means there is an error.  We are as close to a binary solution with double entry as it gets.  Yes it has worked (nothing more to do) or no it has not (investigation needed).

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