JP2004502260A - Double entry bookkeeping method - Google Patents

Abstract

A dual-entry method of accounting that uses plus and minus instead of debit and credit, where transactions are classified as positive, negative and neutral and recorded in the appropriate account . Transactions are summed to show the capital of the business.

Description

[0001]
(Technical field to which the invention belongs)
The present invention relates to a method of accounting using double entry bookkeeping without using debit and credit. The present invention uses a common-sense bookkeeping technique and proposes a technique not found in bookkeeping so far.
[0002]
(Conventional technology)
The basic system of accounting was invented in 1494 by Luke Pacioli, a Franciscan monk. He invented the well-known "account double entry system". The basic elements of a dual entry system have not changed substantially since then. This dual entry system performs debit and credit entries. For debit and credit amounts to be equal, every debit must have a corresponding credit.
[0003]
What is accurate debiting? Is it good? Double entry bookkeeping method Debiting equipment increases equipment. Even though this is good, debiting sales will reduce sales. This is bad. Debiting a cash account increases the cash account. It is well known to bankers that debiting an account reduces the balance of a deposit. Thus, debiting terms are confusing.
[0004]
Another procedure that may lead to confusion about accounting is the "book balance" procedure. Every debit entry has a corresponding credit entry, and vice versa. One might think that a set of books' balances means "income = expenditure." If the capital of a business falls from $ 1 million to $ 0, it is difficult to explain the balance of the books to the employer. Employers will think that their book value has decreased. Similarly, if the capital of a business increases from $ 1 million to $ 10 million, it is difficult to explain the balance of the books to the business owner. Employers will think that the book value has increased.
[0005]
In fact, the notion of debiting and crediting, or matching the bottom of a book, is not common sense. Business people are disadvantaged in understanding such a complex accounting system. Employers are at the mercy of accountants and bookkeepers who make the environment comfortable with "debit and credit".
[0006]
The confusion surrounding current accounting methods is substantiated in the following testimony. "Do not try to understand why a transaction is debited, not a ledger credit, just remember." (Seth Gordin, Paul Lim, " If you want to understand, "p. 27, 1998. "That is, the system works, even though it sometimes deviates from the common sense." (Michael McCann's Guide to Financial Accounting for the Fools, p. 42, 1998).
[0007]
In fact, in the last 500 years, all industries have undergone tremendous improvements in their systems. Therefore, the accounting system also needs to be improved.
[0008]
(Disclosure of the Invention)
The present invention aims to solve the shortcomings of current accounting systems by creating a tool of information useful for accounting for businessmen. As a basis for this accounting system, business transactions are divided into three categories. Positive processing, negative processing, and neutral processing.
[0009]
A positive transaction is a transaction that increases the capital of the business. Receiving cash from sales is an example of positive processing. Positive processing is recorded as plus (increase). In the above example, the cash is deposited and increases the amount in the savings account. Sales are recorded and net profit increases. In this transaction, both debit and credit are treated as increasing their accounts. A plus indicates that the result of this transaction is stronger than before the transaction.
[0010]
Negative transactions are transactions that reduce the capital of a business, for example, by paying more for money. Negative transactions are recorded as negative. In the above example, the funds are spent reducing the savings account. This expense is recorded and the net profit is reduced. In this transaction, both debit and credit are treated as a deduction from their respective accounts. A minus indicates that the result of this transaction is weaker than before the transaction.
[0011]
Neutral transactions are transactions that do not change the capital of the business. For example, when a company borrows money and places it in a company's savings account. Neutral transactions are recorded with one plus and one minus. In the above example, the funds are deposited and increase the deposit account. Plus is used to record cash account growth. Negative debt is used to reflect the financial pressure of lending institutions. The company has neither increased nor decreased its funds before the transaction. Plus and minus are shown to cancel.
[0012]
A business's general ledger must be split into two types of accounts. “Equity” and “changes in equity”. “Capital” is the account shown on the balance sheet under the current accounting method. These accounts reflect the assets and liabilities of the business. A positive balance account is an asset. An account with a negative balance is a liability. If the positive balance account is larger than the negative balance account, it indicates that the capital of the business is good.
[0013]
“Changes in equity” are the accounts shown in the income statement under the current accounting method. These accounts reflect that year's income and expenses. The account of the positive balance is an income account. The account with the negative balance is an expense account. If the positive balance account is greater than the negative balance account, it indicates that the business made a profit in the year.
[0014]
The accuracy of the books is verified by comparing the beginning capital with the current difference in capital. This difference must equal the total change in capital.
[0015]
For example, if equity (asset and debt) increased by $ 300,000 from the beginning of the year, the change in equity would have to show a positive balance of $ 300,000.
[0016]
The general ledger is maintained in Excel database format and access computer spreadsheets and traditional paper format. In the case of a spreadsheet or database implementation, each transaction is data. The application handles each part of this data. The information is then stored in a suitable column of a spreadsheet or a table in a database so that the balance is displayed as described above.
[0017]
In the preferred embodiment, in a simple computer program, the following is a convention. That is, a positive transaction on equity involves a positive transaction of another equity (neutral transaction) or a change in equity (positive transaction). Similarly, in the same program, a negative transaction on capital involves a change in capital (negative transaction) or a positive transaction on another capital (neutral transaction).
[0018]
Unlike debit and credit, the positive and negative numbers are not equal. If there is more than minus, the company is profitable and its capital has been increased. If there is more than plus, the company has lost and its capital has been reduced. The objects and advantages of the present invention will become apparent from the following detailed description of preferred embodiments of the invention.
[0019]
(Detailed description of preferred embodiments)
The accounting calculation method according to the present invention classifies all transactions as either positive, negative, or neutral, and appropriately records these transactions in the general ledger. The method of handling positive transactions is shown in the flowchart of FIG. The method starts at step 11 and at step 12 the user determines whether the transaction is a positive transaction. Positive transactions are transactions that increase the capital of the business.
[0020]
As an example, receiving a fund to make a sale is a positive transaction. Positive transactions are scored as positive. If not, the user proceeds to the inquiry of step 13 in FIG. For a positive transaction, entering the transaction requires three steps. First, in step 14, the user determines which capital is affected by the transaction. Second, at step 15, the user determines which capital changes that will be affected by the transaction. Third, at step 16, the user increases capital and changes in capital.
[0021]
Once this transaction has been recorded, step 17 verifies the validity of the input value. This step 17 is performed by a simple computer program or manually. The verification is made by calculating the difference between the current value of total capital and the value of total capital at the beginning of the period. Step 18 determines whether this difference is equal to the change in total capital. In step 19, if the difference is equal to the value of the change in total capital, the input is verified as correct and complete. If, at step 20, this difference differs from the change in total capital, an error exists.
[0022]
In order to resolve the error, capital and changes in capital need to be reduced in the amount of the transaction, and this process must be restarted in order to perform the correct transaction.
[0023]
The flowchart of FIG. 2 is a diagram showing a method for handling negative transactions. Negative transactions are transactions in which the capital of a business is reduced by paying more for funds. Negative transactions are recorded as negative.
[0024]
If the user determines in step 13 of FIG. 1 that the transaction is not a positive transaction, the process continues to step 21 of FIG. In step 22, the user determines whether this transaction is a negative transaction. If the transaction is not a negative transaction, the user proceeds to the inquiry shown in FIG. If the transaction is negative, the process proceeds to three successive steps.
[0025]
First, at step 24, the user determines which capital will be affected by the transaction. Second, at step 25, the user determines which capital changes will be affected by the transaction. Third, at step 26, the user reduces these capital and changes in capital.
[0026]
This step 26 can be performed by a simple computer program or manually. This verification is performed by calculating the difference between the current value of total capital and the value of total capital at the beginning of the period. In step 18, it is determined whether or not this difference is equal to the change in the total capital. If the difference in this value is equal to the change in total capital, the entry is verified as correct and complete. If this difference is not equal to the change in total capital, an error exists. To resolve the error, capital and changes in capital must be increased by the amount of the transaction. Then, in step 30, the process must return to step 11 in FIG. 1 and restart from the input of a correct transaction.
[0027]
The flowchart shown in FIG. 3 illustrates a method for handling neutral transactions. Neutral transactions are transactions that do not change the capital of the business. For example, it occurs when a company borrows and places it in the company's savings account. Neutral transactions are recorded with one plus and one minus. If the user determines that the transaction is not negative, the process moves from step 31 in FIG. 2 to the step in FIG. The only remaining option is a neutral transaction in step 32, since this transaction was previously determined to be neither a positive transaction in step 12 nor a negative transaction in step 22.
[0028]
The user must determine which capital is affected in step 33 or which change in capital is affected in step 34.
[0029]
The next step 35 is to determine whether this transaction will increase one of the capitals. In this case, the other's capital must also be reduced. There is no change in the company's capital in this transaction. If, at step 36, the user determines that one of the changes in capital has increased, then at step 37, the change in the other capital must also decrease. At this time, the transaction does not change the company's capital.
[0030]
Once the transaction has been recorded, the next step 17 is to validate the input. This step 17 can be performed by a simple computer program or manually. Verification consists of calculating the difference between the current value of total capital and the value of total capital at the beginning of the period. At step 18, it is determined whether this difference is equal to a change in total capital. If the difference is equal to the change in the total capital, the validity of the input is verified in step 19, and the input is completed. If, at step 39, this difference is different from the total change in capital, an error exists.
[0031]
To resolve the error, if one of the capitals increases, that capital must be reduced. If its capital decreases, it must be increased. On the other hand, if the change in capital increases, it must decrease. Decreased capital changes must increase. If an error occurs, step 30 must proceed to step 11 of FIG. 1 and the transaction must be entered and resumed correctly.
[0032]
Hereinafter, an example of this method will be described. Below is a sample transaction at a hypothetical company.
[0033]
The ledger shown in FIGS. 4 to 6 shows a list of transactions indicating what the company's books will look like as a result of the transaction. The operation of the transaction is shown below. 1. The company credits some of its products for $ 2,000 (see FIGS. 4 and 5). 2. The company sells some of its products for $ 100 in cash (see FIG. 4). 3. The company gets $ 1,950 of unpaid receivables (see FIG. 5). 4. The company buys $ 1600 in inventory (see FIGS. 5 and 6). 5. The company pays the seller $ 1,650 of the company's outstanding payment account (see FIGS. 5 and 6). 6. The company will incur a $ 1,500 liability for the cost of the inventory sold (see FIGS. 4 and 5). 7. The company pays $ 200 for expenses (see FIG. 4). 8. The company amortizes $ 90 of the equipment (see FIGS. 4 and 5). 9. The company pays $ 50 as a shareholder dividend (see FIGS. 4 and 5). 10. The company pays $ 80 in long-term debt (see FIGS. 5 and 6). 11. The company pays $ 40 of interest on the outstanding debt (see FIGS. 4 and 5).
[0034]
The above transactions are appropriately categorized as follows. Transaction 1: Positive transaction (plus receivables and sales). Transaction 2: Positive transaction (plus funds and sales). Transaction 3: Neutral transaction (funds and negative receivables). Transaction 4: Neutral transaction (inventory and negative payment accounts). Transaction 5: Neutral transaction (positive accounts payable and negative funds). Transaction 6: Negative transaction (negative inventory and negative cost of sales). Transaction 7: Negative transaction (negative funds and negative operating expenses). Transaction 8: Negative transaction (negative allowance for depreciation and negative depreciation). Transaction 9: Negative transaction (negative funds and negative dividends). Transaction 10: Neutral transaction (negative funds and positive long-term debt). Transaction 11: Negative transaction (negative funds and negative interest expense).
[0035]
4 to 6 show the final balance of the general ledger account. In the general ledger account, the company's capital increased $ 220 from $ 600 to $ 820.
[0036]
The above-described embodiment shows only one of the embodiments and does not limit the present invention. Thus, while specific embodiments of the novel and effective double entry bookkeeping method of the present invention have been described, reference to such specific embodiments limits the scope of the invention in the claims. is not.
[Brief description of the drawings]
FIG. 1 illustrates a method for recording and checking positive transactions.
FIG. 2 illustrates a method for recording and checking negative transactions.
FIG. 3 illustrates a method for recording and checking a neutral transaction.
FIG. 4 illustrates a general ledger of a typical transaction for a change account in equity.
FIG. 5 illustrates a general ledger of a typical transaction of capital for asset accounting.
FIG. 6 illustrates a general ledger of a typical transaction of debt account capital.

Claims (25)

In the method of maintaining accounting books to reflect the capital of the business for immediate browsing,
(A) Prepare a double entry ledger system,
(B) showing a list of accounts where the transaction takes place,
(C) classifying all said transactions,
(D) providing means for inputting a transaction into the double entry ledger system;
(E) providing a means for verifying that the entered transaction is properly recorded,
(F) providing means for determining the capital of the business without additional accounts. Equipped with a double entry ledger system,
(A) providing a first ledger that records transactions representing changes in the capital of the business;
The method of claim 1, comprising: (b) providing a second ledger that records transactions representing the current capital of the business. To verify that the transaction was properly recorded,
(A) summing the first ledger including changes in capital transactions;
(B) summing said second ledger including capital transactions;
(C) calculating the difference between the capital on January 1 of the same calendar year and the total of the second ledger,
3. The method of claim 2, comprising: (c) determining whether the difference is equal to a sum of transactions of the first ledger. 3. The method of claim 2, further comprising providing a means for determining capital of the business by summing transactions of the second ledger. The method of claim 1, wherein preparing a single ledger provides the dual entry ledger system. To prepare the one ledger,
(A) Prepare column 1 for recording various accounts for recording transactions,
(B) preparing a column 2 for recording transactions indicating changes in the capital of the business,
6. The method of claim 5, comprising: (c) providing a column 3 that records the current capital of the account. Providing a means to verify that the transaction was properly recorded,
(A) summing the transactions in column 2;
(B) summing the transactions in column 3;
(C) calculating the difference between the capital on January 1 of the same calendar year and the total of the transactions in column 3;
7. The method of claim 6, comprising: (d) determining whether the difference is equal to the sum of the transactions in column 2. 7. The method according to claim 6, further comprising providing a means for determining the capital of the business by summing the transactions in the column 3. Classifying all said transactions comprises:
(A) classifying transactions that increase the capital of the business as a positive treatment,
(B) classifying transactions that reduce the capital of the business as negative transactions;
The method of claim 1, comprising (c) classifying transactions that do not increase or decrease the capital of the business as neutral transactions. Providing a means for inputting a transaction into the double entry ledger system,
(A) determining whether the transaction is a positive, negative, or neutral transaction;
(B) determining the accounts affected by the transaction;
(C) Enter the positive input into two accounts for positive transactions, enter the negative input into two accounts for negative transactions, and apply one of the positive inputs of one account and one of the negative transactions of one account to neutral. The method of claim 1, comprising inputting a transaction. In a system that maintains an accounting system to reflect business capital,
(A) a central processing unit;
(B) a user interface;
(C) a display device;
(D) a program running on the central processing unit to maintain an accounting ledger based on the input from the user interface and display the accounting ledger on the display device. The system of claim 11, wherein the accounting ledger is further characterized by capital accounts and changes in capital accounts. The system of claim 12, wherein the total of the capital accounts indicates the capital of the business. 13. The system of claim 12, wherein the total change in capital account indicates a change in capital of the business since the end of the previous calendar year. The ledger calculates the difference between the total of the capital accounts at the end of the previous year and the total of the current capital accounts, and determines whether the difference is equal to the total of the changes in the capital accounts. The system of claim 12, wherein the accuracy is viewed. In the method of maintaining accounting books to reflect the capital of the business for immediate browsing, (a) prepare a dual data entry system,
(B) Prepare an account database that records data reflecting the transaction,
(C) classify all data inputs according to the classification system,
(D) providing means for inputting data to the dual data input system;
(E) providing means for verifying that the data is properly recorded;
(F) providing means for determining an instantaneous total of the net asset value of the data. Providing the dual data entry system comprises:
(A) providing a first storage medium for recording data indicating a change in the capital of the business;
17. The method of claim 16, comprising: (b) providing a second storage medium for recording data indicative of a current capital of the business. Providing means for verifying that the data is properly recorded,
(A) summing the data of the first storage medium, including data of changes in the capital of the business;
(B) summing the data of the second storage medium including the capital data of the business;
(C) calculating a difference between the capital on January 1 of the same calendar year and the total of the second storage medium;
18. The method of claim 17, further comprising: (d) determining whether the difference is equal to a sum of the data on the first storage medium. 18. The method of claim 17, further comprising providing means for determining capital of the business by summing data on the second storage medium. The method of claim 16, wherein providing the dual data input system by providing a single storage medium. Providing the one storage medium includes:
(A) providing a first section for recording various accounts for which data is recorded;
(B) providing a second section for recording data indicating changes in the capital of the business;
21. The method of claim 20, comprising (c) providing a third section for recording a current capital of the various accounts. Providing means for verifying that the data is properly recorded,
(A) summing the data of the second division,
(B) summing the data of the third division,
(C) calculating the difference between the total of the capital data of the third category and the capital on January 1 of the same calendar year;
22. The method of claim 21, comprising: (d) determining whether the difference is equal to a sum of the data in the second partition. 22. The method of claim 21, further comprising: providing a means for determining capital of the business by summing data in the third category. Classifying all data entries according to the classification scheme,
(A) classifying data that increases the capital of the business as positive data,
(B) classify the data that reduces the capital of the business as negative data,
17. The method of claim 16, comprising: (c) classifying data that does not increase or decrease the capital of the business as neutral data. In a method for providing means for inputting data to the dual data input system,
(A) determining whether the data is positive data, negative data, or neutral data;
(B) determining the accounts affected by the data;
(C) Enter a positive input into two accounts for positive transactions, enter a negative input into two accounts for negative transactions, and apply one positive input to one account and one negative input to one account to neutral. 17. The method of claim 16, comprising inputting a transaction.

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