Talk:Double-entry bookkeeping system

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[edit] Islamic banking history?

The Islamic banking page suggests that the early Islamic banking system introduced some innovative elements including double-entry bookkeeping. However, this page does not refer to that, and instead mentions only the later? Medieval Italian origins. Is it possible that one influenced the other, just like the Arabic numbering system? I don't know the answer, so please if anyone can find out, it would be good to resolve it. —Preceding unsigned comment added by 70.127.124.69 (talk) 18:55, 22 March 2008 (UTC)

The claim about double-entry innovations in the Muslim world and their influence on Italian double-entry was advanced by Zaid in “Were Islamic Records Precursors to Accounting Books Based on the Italian Method?” Accounting Historians Journal, Vol. 27, No. 1, pp. 73-90. This paper was challenged by Nobes in “Were Islamic Records Precursors to Accounting Books Based on the Italian Method? A Comment”, Accounting Historians Journal, Vol. 28, No. 2, pp. 207-214. There isn't any convincing archival evidence for Zaid's claims, so the reference in Islamic banking probably needs to be corrected.Mtalib622 (talk) 16:20, 11 June 2008 (UTC)

[edit] Explanation?

Suggestion: anyone care to explain the meaning of: A/c, a/c, b/f, and c/f in the Article? It might be interesting not only for non-natives in English... Thx. —The preceding unsigned comment was added by 62.178.77.228 (talk) 08:47, 11 April 2007 (UTC).

[edit] Using template

I recognize that user NilssonDenver prefers not to use the template above, but does anyone else feel that templates should be included to unify the articles within the area of accounting? The content of the template could be improved to meet the consensus of users, if necessary...--Dpr 16:57, 12 April 2007 (UTC)

[edit] Classification Of Accounts

(a.)According to Modern approach Accounts are classified into five groups: 1.)Asset 2.)Expense 3.)Revenue 4.)Liability 5.)Capital

(b.)According to Traditional approach Accounts are classified into three groups: 1.)Real : all the assets except Debtors 2.)Nominal : all the expenses , incomes , losses, gains. 3.)Personal : all the accounts of persons, company or firms. these are further classified into three types i.)Natural: all the accounts of persons. E.g. debtors, Creditors ii.)Artificial: all the accounts of a company, a firm,or any other business organization. E.g. Bank, Sharma Traders etc. iii.)Representative: all the expense O/S or prepaid, revenue in advance or accrued.

Where is this information coming from? Are there some reference documents available? NilssonDenver 15:06, 1 September 2007 (UTC)

I deleted most of this as I don't recognise it and it is unsourced. I have retained the 5 elements and referenced it to the IASB framework. AnthonyUK 14:54, 4 November 2007 (UTC)

[edit] Need Explanation of "have a normal balance of debit/credit"

I think the following passage needs to be prepared by a further explanation: "Assets, Expenses, and Drawings accounts (on the left side of the equation) have a normal balance of debit. Liability, Revenue, and Capital accounts (on the right side of the equation) have a normal balance of credit."

The problem is that "debit" is ordinarily thought to mean "subtracting something," while "credit" is thought to mean "adding something." The expressions "have a normal balance of debit" and "have a normal balance of credit" in the above passage are just unintelligible against this background.

Could someone please insert an explanation of what is meant by these expressions? —Preceding unsigned comment added by 146.74.1.99 (talk) 00:32, 12 September 2007 (UTC)

The problem is that "debit" is ordinarily thought to mean "subtracting something," while "credit" is thought to mean "adding something." The expressions "have a normal balance of debit" and "have a normal balance of credit" in the above passage are just unintelligible against this background.

[edit] Explanation of "have a normal balance of debit/credit"

A very simple explantion of the words debit and credit in a acccounting environment. The words are nothing more the labels identifying which side to record the amounts with. I learned that in accounting 101 class. —Preceding unsigned comment added by 75.68.51.240 (talk) 22:17, 17 February 2008 (UTC)

This is a common misconception in bookkeeping. There are no negatives or positives in bookkeeping, only debits and credits. Computerised accounts software requires pluses and minuses to do calculations. In this case Debits are normally treated as "positive" amounts and Credits as "negative" amounts which seems counter intuitive as Sales are income and income is usually treated as a positive. When you look in the General (nominal) Ledger you may see Sales amounts recorded as negative values (credit) and expense amounts recorded as positives (debit). But they may also be reveres with Sales as Positive and expenses as negatives. Correctly they should be shown as Debit (Dr) or Credit (Cr) amounts. The balance on an account is said to have a debit (DR) or credit (CR) balance and not a plus (positive) or minus (negative) balance.

In Bookkeeping these are the rules: Debit = Asset and Expenses (and money in to the bank account) Credit = Gains (Sales) and Liabilities (and money out of the bank account) These are the rules and you must know them. You must know also know terms used such as what an Asset is and what a Liabilty is.

It is like learning another langauge. For example, there are grammar rules in each language that don't seem logical to someone who has english as a first language. The United Nations in English is "United Nations" and in French it is "Nations Unies" (Nations United). Why is it not Unies Nations? Because that is the way that language is constructed. Other languages use prefixes before words to indicate the word as being "male", "female" or "neutral". Why, because that's the rules and if you don't use the rules you wont be understood! By the way English is one of the most complicated languages when it comes to rules. If a letter starts with a vowel (a,e,i,o,u) you use "an" such as "an apple" and not "a apple", explain that to someone learning english :-) Bookkeeping and accounting have "grammar" rules you just have to learn.

As to why Assets and Expense are Debits and Gains and Liabilities are Credits, that was decided by someone long ago and everyone in the world now uses those rules. He just decided thats they way to go and now we are stuck with it. It's like why is the colour red called red, because that was what was decided by someone way back in history! NilssonDenver 10:08, 5 October 2007 (UTC)

Yep, these accounting terms confused me for years until I read the article today. I still was uncomfortable though, so for my own mind's ease I have invented replacement words for debit and credit as far as accounting is concerned. I just mentally replace them with words that derive from the words left and right (lebbit and reggit) so that when reading, I immediately think of left and right and try to pay no mind to the other familiar usages of the words debit and credit, which always mislead me in accounting usage. Because that's all that is meant to be implied: affiliation with left or right side of the accounting equation (Assets + Expenses + Drawings = Liabilities + Revenue + Capital). It's the accounting equation arrangement that determined what we call left or right. Nicknicknickandnick 08:03, 29 October 2007 (UTC)

[edit] Origin of double-entry

I deleted the following paragraph from the article:

Double entry bookkeeping method was discovered in 1458 by Dubrovnik citizen Benedikt Kotruljevic (Dubrovnik 1416 - Aquila 1469), not Luca Pacioli. Manuscripts of his "The Book on the Art of Trading" were published after he died, in 1573.

This is a very strong claim, and if you want to rewrite the history of double entry bookkeeping, you're going to need to provide a source. I'd also point out that if the manuscript wasn't published until 1573 you can't possibly know whether it had been written before or after Pacioli. AnthonyUK (talk) 18:41, 7 December 2007 (UTC)

[edit] Examples of debits and credits

I don't know enough about the subject to change anything (hence why I'm reading it) but are the two tables under "Examples of debits and credits" duplicates? —Preceding unsigned comment added by 81.152.181.95 (talk) 21:10, 13 January 2008 (UTC)

Well spotted :-)
I think someone must have made the table easier to read and forgot to remove the old one. I'll delete the top one as it isn't as clear I think. AnthonyUK (talk) 22:06, 13 January 2008 (UTC)

[edit] Photo request

 It is requested that a photograph or photographs be included in this article to improve its quality.
The Free Image Search Tool (FIST) may be able to locate suitable images on Flickr and other web sites.

It would be nifty to actually see the "T" in a ledger as described. -- Beland (talk) 22:37, 1 May 2008 (UTC)