h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

http://www.bbc.co.uk/h2g2/guide/A667794

I understand this, 'coz I wrote it and I'm an accountant.

Does it make sense to anyone else?

Comments please.

Geoff

Yup, it actually made sense to me, but I must admit, I'm still confused as to just how and why accountants ended up using debit and credit for the opposite meaning as the general public.

I touched on this in the footnotes...

Most people get their definition of Debit & Credit from their bank statement.

The key thing to understand is that the bank's account with you is a mirror image of your account with the bank. Your statement shows the bank's account with you. It shows how much money the bank owes you (assuming no overdraft). When you write a cheque, you are reducing their debt to you. This is as good as money coming in, so it's a debit entry.

Clearer?

Maybe I should expand on this in the article......

Your last comment was perfect, the first time I've actually clearly understood the principle (ok so I'm stoopid), but if it could be worked into the article, it would be great

whisky

I've added that explanation into the article.

Geoff

Hmm! In my experience loan sharks require interest on their loans, even if the're repaid the same day. You might want to change this to his mother, or some other such altruistic person. (Of course mother's aren't always altruistic, but generally ...)

Good entry! I think it should make it into the guide.
One nitpick: You might want to explain what CR and DR stand for.
Other than that it's fine and it does make sense.

Tube

Ah, and one other thing came to mind: Why?
I mean, why have this difficult system when a simple debit/credit record would seem enough? what are the advantages of Double Entry Book-Keeping? Just to make accountancy well-paid?

A sale is a sale is a sale, but the method of payment might differ. You might get paid in full , or by instalments. If you simply had one entry that said "Sales - £100", how would you know how much money was owed to you at any one time?

Instead, we have double entries.. credit Sales & debit Debtors.
Each time an instalment is paid.. debit Cash & credit Debtors.

er....has that answered the question?

And anyway, not all accountants get paid fortunes. This one doesn't, for starters!

Geoff

PS I'll define CR & DR when I get back to the office on Monday and login as my BLACK side.

Ah, fine, that makes sense. How would you deal with goods the title to which does not pass until the last rate is paid? .... no,you don't have to answer that one

You normally don't make any accounting entries for title of goods.In the UK, you're more likely to sue for damages than forcibly reclaim the goods.

I know I didn't have to, but...

Geoff

Great Entry. A bit biased toward UK people, but so is most everything else here.


Dancer

OK....I've changed the DR & CR abbreviations to avoid any potential confusion.

Dancer, what's UK biased about the article? AFAIK, Double entry is the accepted standard in most nations. There are differences, but the basics are the same wherever you go.

Editorial Note: This conversation has been moved from 'Peer Review' to 'The Basics of Double Entry Book-keeping'.

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Congratulations!

Congratulations!

Yippee !!

This deserved to get into the guide, anything that could make something so completely incomprehensible so comprehensible gets my vote (does this sentence make sense?)


whisky

Congradulations, a nice and straight forward entry, practical and well written.


Dancer