Summary of justification and technical introduction
Other Articles on Household Accountancy (DWBA) referred to new ideas that underpin the new domestic accounting model. In this article, we summarize ideas, ideas and concepts based on a new book "Accounting for Better Life".
In the simplest case, the bill is only a list of transactions for specific areas of financial activity or interest. The most respected account form is the bank statement that customers receive regularly from their bank.
The first important thing to appreciate is that bills are used to accumulate values. We use bank and credit card accounts so much that people are sometimes not aware that the accounts are equally useful for accruing details of a transaction, such as our home, our cars, investments, etc.
Bills typically contain two columns, one for incremental (+) accounts, the other for the (-) amounts.
The next important concept is to evaluate that there are two distinct, comprehensive invoices that can be used in our set or in our books. One is called a device account and the other is a liability account.
The type of type type of your account, as its name suggests, typically applies to assets such as bank accounts, homes, cars, and so on. It applies to borrowing transactions. The idea is that positive amounts are + the asset account increasing value; Thus, the inclusion of the HUF 500 in asset book + is underlining the increase of 500 pounds. Accountants, however, are also included in business accounts that home accountancy is considered to be unskilled as other other accounts of the device that are not strictly related to a device such as a car or a home. For example, asset purchase and depreciation reports.
The other general account is a liability account. It is used to accumulate debts and / or liabilities. Now, however, there is a reverse concept in the case where 300 £ of increasing amounts, such as the + column of the accounts, represent more debt or greater responsibility, while the 200 pound reduction is less debt. Perhaps you may think that the additional value of the debt means a lower value, but that depends on the purpose for which the liability is used. Accountants mostly use type accounts to keep their debts but again require type accounting for certain transactions. These are counted as home account books because they are not related to the real debt of a person or household; Examples of these are the collection of temporary information on the acquisition of tools and the increase in home value.
Another confusing area here is the various accounts used in the names of column addresses used in eligible software packages; in business, the convention is that the debits (asset bills + column and column of liability bills) are traditionally in the left column of each account, the credits on the right (the column of asset accounts and the column of liability accounts) . The agreement is not always adhered to by certain software packages and does not always use titles, loads, and credits. Double Entry and Accounting Equation
The last thing to do with DWBA's accounting is the so-called double entry. This concept seems to be confusing for people because they have two aspects. First, an accounting concept that refers to a considered approach (no proper term!) Financial aspects of some financial units. In business, an entity may be a class or a division, a single trader or even a whole plc. In the case of domestic accounting, such an organization would most often be an individual or a household. The point is that any accounts supporting any of these entities take into account or model the total financial aspects of an entity. Thus, the accounts will be able to capture and visualize static and dynamic aspects of the entity's finances. The practical effect is that a set of double-entry accounts (accounting) requires an account to maintain the entity's total financial value, as well as usually certain accounts for accumulation of periodic changes over increasing and decreasing values. The result is a balanced account of the accounting equation.
Another common use of double entry is the accounting techniques associated with implementing these accounting forms, requiring two (double) entries in each new transaction to maintain the account balance.
What do we balance? The key to double access is the balance of equality and the balances of accounts that may perhaps be linked to this equation in some way; the so-called accounting equation.
Taking into account the household, it can be a collection of assets – one home, one car, three investments and one aggregate group of unspecified handsets. We could set up 6 bills to represent these assets and provided that the lack of settlement of the personal debt – illegally claim – we could say that our domestic assets are equal to the sum of the 6 balance accounts. Here is a statement that is not yet a true equation:
Total Asset a / c Balance = Domestic Richness
. Now, if you have a debt, sometimes a mortgage on the house, and lend a car, two more bills (19459007 type of liability) could be set up to keep the two debts.
Since these debts belong to two financial organizations in two sums, we have to allocate the appropriate sums that we have to repay from the value of our assets in order to calculate the changed value of our domestic assets so that we can show this in another statement:  All Asset a / c balances – All liabilities are / c balances (type of debt) = domestic wealth
The critical point is the double entry system to keep the amount of our variable domestic value. I call it domestic riches.
We now have an equilibrium equation:
All Asset a / c bals – All responsibilities are / c bals (type of debt) = Domestic property a / c left
The next question is account to hold domestic assets or debts?
If you think that the amount of assets represented by domestic assets is less than the debt for the future benefits of a household or individual property. There must be logical responsibility for the account of responsibility.
We can now sort the equation so that all type type bills are on one side for all liabilities type accounts;
Total assets a / c balance = Total liabilities (debt) balance + Liability (DW) a / c balance
Imagine a situation with 20,000 pounds in the bank. In order for this individual to create a double-entry accounting system, we need a bank account account and, since there is no debt, only a domestic asset account; a double entry is required for the initial transaction, £ 20,000 will be charged to the bank on the asset account and the amount credited to the domestic assets liability account. The calculation equation shows the following result:
Device a / c bals £ 20,000 = Total liabilities (balances) balances 0 + Liability (DW) a / c left £ 20,000
Let's see how we handle a $ 2000 credit purchase. By decomposing the steps, consider first the borrowing – debit bank with a value of £ 2,000 and create a new account account for the credit institution and credit the same amount of £ 2,000. this effect in the equation:
Asset a / c bals £ 22,000 = All Liability (Debt) bals £ 2,000 + Responsibility (DW) a / c left £ 20,000
Always balance £ 22,000 on both sides!
Now buy the car for 7,000 pounds from £ 2,000 in credit and extra 5,000 pounds of banking assets. We have to set a car bill to get the value of the car you buy. Balanced Equation:
Asset a / c bals £ 22,000 = All Debt (PA) Balance 2.000 GBP + Liability (DW) a / c bal 20 000 £
– £ 7,000) and / c is £ 7,000, without changing the total value on the asset side, but on the asset accounts on the asset accounts.
Another idea for double entry is that a single entry for a balanced equation (balanced accounts) must be unbalanced. The only way to maintain balance is math, if you add something to an account on one page, you'll need to add the same amount to the account on the other side. or if we add something to an account on one page, we must reduce the same amount in one account on the same page. This is practically where you work, the accounting rule that disclosure of debts must be balanced by credit transfer.
In the case of purchases of foodstuffs, beverages and clothes, utility bills, and purchase holidays, we see a credit card on the bank account or credit card payment on the property account account for each credit card. We call these expenditures and result in an equivalent reduction in our domestic wealth. Obviously, if we issue credit as the first part of each cost transaction, we need appropriate debit items to settle the balance. Increasing loads are a device type type billing, so this will be the type of account we need for these growths. According to the same logic, income, such as salary or pension, is entered in our bank account as an increment or as a debit batch, and we must equalize the credit receipts on a new account for domestic increases – the increase of the debts in liabilities this is the sort of new account that we need to make up for the changes in the growth of domestic wealth. Traditionally, double-entry accounting has not been used for personal and home use; and the software packages that support home-based support usually do not support it in an inappropriate way. This is partly due to the fact that when people get involved in home bookings, they usually start activities such as reconciling control accounts and simple budgets. To do this, you only need to create accounts for one or two areas, especially bank accounts. With this, as far as it may be useful, there is no concept for seeing the whole picture, static and dynamic views of the financial situation.
Business vs. Domestic Accounting
When I first decided to start & # 39; my own home accounts many years ago, I thought that since business accounting has evolved so long to successfully satisfy business leaders (and it was a legal requirement for them), it should be strange in business accounting that I can search to help you to better manage your personal and home finances. As I've described elsewhere, I realized that business accounting methods themselves did little to help with poor focus (gains on capital gains) and that actual bills, reports, and related business ratios were clearly completely incorrect.
When thinking about alternatives, I've come to realize that there are features that can be extracted from business and modification, effectively leveraging home financial management.
The double entry system is a static or "snapshot" of the state's financial position and this balance. This shows assets, resources, and capital value on any given day.
Most of the business balance entries come from a balance of accounts that can easily be extracted from the trial balance, which is simply the balance of all of our books' accounts.
The structure and content of Domestic Balance (DBS) highlights the most important components of domestic assets and resources to calculate the new value of domestic wealth. Rather than distributing net profits to a business balance, the domestic version shows the total domestic change (TDC) as a contribution to domestic wealth over the past period.
An important question now is what is TDC? We probably know that the profit or loss business equity of the two accounts – the trading account and the profit and loss account – appears. These two reports highlight the dynamics of the financial situation; the changes over a period of time.
In business, focus is on profitability, so these accounts primarily focus on higher-level aspects of the business, increasing inventory and closing value.
The next invoice, which relates to the profit and loss account, shows the effect of other increases and decreases, which generally reduce gross profit to a somewhat lower value, which is called a net gain.
Individual accounts required by the business can not have any place in home finance because we are not primarily interested in profits. The New Focus – Domestic Wellbeing What is the financial aspect of home financial matters? Well, I spent a lot of trouble doing this for a few years, and I developed a new approach to approaches and methods that originally demonstrated domestic well-being.
In short, yes, homeowners want to increase their value or value but generally not for profit. # 39; People want to increase their wealth to pay for things that are prone to life-long evolution; such as better homes, some education, hobbies, luxury retirement and retirement as well as declining years of income when drastically decreasing income.
In general, home finance in an earlier year of life is such that it can never be enough to go. Everything is a question of priorities and equilibrium. What should be the best distribution of our expenditures to ensure that we get the best possible balance or compromise with our income?
My solution was to create a structure that best presented the most important areas of domestic finance where decisions could be made on how best to use resources – these are alternatives and priorities. I needed a way that could be used to categorize increments and declines when and when they occurred, and to present the numbers appropriately after they were accumulated. This presentation had to support decision-making, which would be needed to optimize future spending. This should have been done to achieve the best balance between competition priorities to maximize domestic prosperity. Therefore, DWB has become a new focal point for domestic accounting; and can be identified both for the structure of the bookkeeping and the recording of the transactions; and accounting – reporting, analysis and consistent decision-making of future financial activities, which are implemented through the budget. Declaration on Domestic Well-Being
The Domestic Prosperity Statement (DWBS) is a domestic version of the Trading Account and the Profit and Loss Statement and is used to illustrate the deduction of total Domestic Change (TDC) over a period of time. This is the second most important feature of business accounting.
This report simply introduces the structure of DWB, and Microsoft Money runs a pre-stored report with one click. The edited version combines data from current and previous years to help make comparisons.
In summary, the report shows the top three categories of the structure as the groups of transactions, all of which are divided into: and Increase and decrease. These categories may be similar to business accounting nominal codes.
Within these groups, there are lower sub- and sub-sub categories below. For example, Fundamentals included Essentials, Responsibilities and Family, each containing additional subcategories.
A discretionary group, where there is obviously some discretion or choice as to whether regulations and growths are in its component categories, includes Nice-to-Have, Investment for the Future (IFF), and Luxuries.
What was astonished when it was first developed was a fantastic visibility of home loans, in particular the presentation of the distribution and composition of many publishing articles.
The third feature accepted from business accounting is the use of financial indicators.
It will be appreciated that the ratio is simply a comparison of two numbers expressed as a quotient, usually in a decimal or percentage form. Comparisons between certain key amounts and ratios during business processes have played a major role in both disclosing information (shareholders, investors, managers, auditors, etc.), both for the different levels of management as the basis for control. The two components of the ratio, the counter, and the denominator may be candidates for the change.
More than 30 business ratios are less than most people have heard, for example, the different margins and the rates of profitability and liquidity; and of course, virtually none of them suggests housing loans!
From my experience, I knew that figures exposed to domestic finance might have some potential for managing and controlling home finances. The question was, which numbers, and in particular the ratios of proportions that may be proportional, are indicative. The Stages of Domestic, Financial Life
My other experience was in life; now 68 years old, I realized that I was looking back at my interest in home finance, and I distinguished six quite different phases of financial life. I mean that in some aspects of personal finance, there has been a significant change in the sections which, if justified, would justify some form of indicator or measure. In my interest I call these phases:
I have identified five primary factors and many secondary factors in domestic finance, which I think are correlating with these phases of financial life and can be useful for the basics of comparison and more detailed analyzes. Briefly, the most important ratios over a period of time (where abbreviations refer to numbers in DWBS) are:
Fundamental cost factor (BDD / THI) the amount of the sum, the total household growth.
Well-Being Contribution Factor (DDD / THI) – the amount of the amount spent on discretionary extras, from the growth of the entire household.
Future Affordability Factor (IFF / TDI) – the level of financial commitment to prosperity from total domestic growth.
Feel Good Factor (IFF / DDD) – the extent to which future prosperity, the magnitude of the total discretionary decline. – For the positive TDC, domplus or negative TDC is the domic, which, in terms of growth or decline in domestic wealth, contributes appropriately to the share of old domestic wealth. This is the closest comparison of the operating profit or loss.
Starting with the lack of accumulated numbers container, the value of these ratios or factors I use for home use can only be used internally within a household like measuring and searching for changes. Based on the numbers, it is possible to compare with others and to match business standards .
The value of the value of the five factors is for a financial situation and when it appears in the form of a star or a radar graph, it can also provide useful metrics that can help predict areas of concern or stability or uncertainty in a particular financial area. Based on such information, the homeowner can find that the individual data on the accounts is in line with the expected domestic norms
One image is a thousand words, which is not fairer than the presentation of financial information. Such graphs are a general type of bookkeeping s software packages, such as MS Money, a fourth set of business features for easy-to-create products, especially when using double-entry accounting. In terms of home finance, control is feasible and realistic and limits only the amount that homeowners want to go. All this has returned to the need for sense of responsibility.
The analysis must first examine the distribution and balance. Do the ratios be fairly comparable to the bases compared to the total growth?
The information from the results of the final year should outline some basic facts. Could you allow something above and beyond the basics? If so, did the amounts allow a reasonable allocation for discretionary reductions? and what about luxuries?
Your accounts and new accounting methods give you the information and information that you can receive alerts.
What warnings do you want? Today's climate of the financial debt crisis, probably the most important warning you are looking for, is about the likelihood of such a contingent crash. Want to know if your decisions are too close to or even exceed. You want to know if your reserves are depleted, possibly on the grounds that the excessive decline is above growth. You should see the amount of short-term and long-term liabilities; and how their proportions relate to the total value of the assets. Want to know about your liquidity; how much they can shorten their funds to meet the known commitments. Obviously, you do not want to sell your house or car just to pay the bills.
In a less dramatic but important comment, you need to know the proportion of contributions to future prosperity; and if positive, does the amount envisaged represent a reasonable proportion of increments?
Conclusion on Adapting Business Accounting Concepts
To accomplish the functions out of business accounting I needed the dual entry concept. In home-based double-entry home settlement, the main difficulties that I was about to know where I was with individual accounts and inbound transactions. By that I mean, if I watched a single computer registration on the computer screen, it never seemed clear to me what account I was looking at and which drawer shelf needed for the next release.
Over time, I realized that the key to solving this problem belongs to the accounting equation. I needed a way to associate my account at any time in the accounting equation – asset or liability – and which account should be associated to achieve a double balance balance.
As with many amateur accountants, I often had a problem with negotiating the concept of debt with the mortgage and loan account in a so-called "sum of money" on a capital adequacy or domestic asset account. For me, domestic wealth was good. responsibility – more was better – while mortgages and loans were bad. repayable liabilities or debts; and more was not better but worse! This was done by taking into account all the accounts that related to the quasi-obligations, along with the good obligations, to the domestic obligations; the amount or the balance of the liability in these accounts was regarded as "good", obligations. They got Q in the appropriate prefixes.
A total of four accounts belong to this quasi-group, which includes domestic LQ DW, Domestic Change Account (LQ DC), categorized Increase Accounts (LQ Cat Inc) and categorized Declarations Account (AQ Cat Dec) .
Most of the changes in domestic wealth in any period of the year affect spending, such as food, beverages, clothing, utilities, holidays, etc. It comes from related decisions – essentially all fund and discretionary decline. They also end up on the LQ DW account via the LQ DC account, but because they handle most of the duplicate entries, they get through two quasi-invoices of categorized increments and calculations.
Initially I chose one of the earliest versions of MS Money called generalized accounting software packages. Generally, it generally made it possible to make accounts, as needed, with any name you chose.
It has well-integrated query and reporting capabilities, as well as the concept of beneficiaries, categorization tags and budget support as well as inventories and stocks.
With the reflection of double entry, MS Money is not specifically designed for double entry. If so, you would have a diary-like system like dedicated double-entry accounting software, where each transaction is somehow associated with two accounts in the double-entry. Then, with a click of a click or a subsequent upgrading, the two custom entries were assigned to the respective two accounts.
Ez azonban nem jelenti azt, hogy ez a szoftvercsomag nem használható kettős bejegyzésre. Mindössze annyit kell tennie, hogy a szükséges extra számlák hozzáadása után két bejegyzést kell elhelyezni minden bevitt tranzakcióhoz.
Az MS Money egyik kategóriája a jövedelem- és kiadási címkék. A pénz a lakáshitelekkel kapcsolatos címkékkel van előretölve, így például egy egyszerű számlával (nem kettős bejegyzésrendszerrel) a banki kimutatásokkal való egyeztetéshez minden tranzakcióhoz egy megfelelő címke tartozik, például a bérek, az élelmiszerek stb. .
Jövedelem és ráfordítás a MS Pénzeszközökben használt kifejezések, amelyek a terhelés és a hitel számviteli feltételeire vonatkoznak; Talán az otthoni könyvelők számára is hasznosnak bizonyul, az MS Money különböző oszlopfejjelekkel rendelkezik az összes létrehozott fiókhoz tartozó növekmények és csökkenések tekintetében.
Megpróbáltam megtalálni a módszert a címkézés végrehajtásához, amellyel tranzakciókat kellett társítanom a DWB struktúrával, valamint kettős bejegyzést kellett elérnie a statikus és dinamikus jelentéskészítés fogalmainak támogatásához. anélkül, hogy tranzakciókat kellene bevinnie több száz dupla közzétételre.
Az elfogadható, kategorizált kettős bejegyzések 1. fele felhalmozódott azokon a számlákon, ahol bevittek, főleg bank- vagy hitelszámlák, de ez nem fontos. Az időszak végén egy jelentést futtatva az első félbevétel összegeinek összege könnyen kitett, külön-külön hozzájárulva a belföldi változások növekedéséhez és csökkenéséhez. Ezután csak két további bejegyzést ad meg, az egyik a teljes félidőre nő, a másik az első félidő összességében csökken, az egyensúly visszaáll. A megközelítés összefoglalása
Az üzleti könyvelés során elfogadott főbb jellemzők a statikus nézetek mérlegének elkészítése, a pénzügyi változások felmérése a dinamikus aspektus időtartamának meghatározása, az arányok / tényezők meghatározása a mérlegből és a változásokból származó hasznos és jelentős adatok összehasonlításából, valamint a láthatóság és a jelentés javítását célzó grafikus jelentések felhasználásával.
A saját DWB könyvelés létrehozásának gondolatával könyvem leírja a hátteret és az elméletet, valamint a számlákkal, kategóriákkal, jelentésekkel és grafikákkal kapcsolatos részleteket és prototípusokat egy bónusz CD-n a MS Money számlák végrehajtásához.
Regarding implementation on dedicated double entry accounting software packages, I have not yet discovered any that are sufficiently general-purpose to enable the creation of accounts of your own choosing, together with your own details of categorization.
As a final thought on simplification, life in the accounting world can be made much easier for domestic accountants, if the terminology is simplified as much as possible. It will be important not to remove too much of the distinction between some of the technical words but I have found that I have made life much easier for myself, by simplifying, wherever possible.
An understanding of one idea – double entry – and the following, six key words, will get you through with flying colors: asset, liability, debit, income, credit and expense; and my version of the domestic accounting equation, account prefixes and a couple of 'memory joggers', will tie all these features together.
Also, take a look at the author's website on Domestic Well-Being Accounting, together with sample products and a growing list of tutorials at www.dwba.co.uk ; the full ratione and technical introduction with supporting charts and graphics is at:
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