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Revision 1.3, Sun Oct 18 12:02:28 2020 UTC (6 weeks, 6 days ago) by schwarze
Branch: MAIN
CVS Tags: HEAD
Changes since 1.2: +3 -3 lines

improve example to clarify that subaccounts matter for expense and
revenue accounts, not for asset, liability, and equity accounts;
prompted by a question from <Paul dot Kelly at mailfence dot com>

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.Dd $Mdocdate: October 18 2020 $
.Dt PTA-GLOSSARY 7
.Os
.Sh NAME
.Nm pta-glossary
.Nd fundamental terms used for plain text accounting
.Sh DESCRIPTION
The following terms are fundamental to understanding
.Xr pta 1
and are used consistently throughout the documentation:
.Bl -tag -width Ds
.It Em account entry
A record containing the following fields:
.Bl -tag -width Ds -compact
.It year
a four-digit unsigned integer
.It month
an integer in the range from 1 to 12
.It day
an integer in the range from 1 to 31,
typically used for the day of booking
.It id
a string which does not need to be unique,
typically used for booking identifiers or booking numbers
.It amount
a floating point number, with the currency always being the same
.It text
a string, typically used to state the purpose or the business partner
.El
.Pp
Account entries are used to describe all sorts of values (assets,
liabilities, and equity) and payments (both incoming and outgoing).
They can represent anything that has a well-defined monetary value.
.It Em account
A list of account entries, ordered chronologically.
Each account is uniquely identified by an unsigned integer number
called the account number.
Use accounts to collect entries that serve a common purpose.
Accounts can represent assets (e.g. cash in the wallet, bank accounts,
invoices issued to customers, stocks of goods, real estate, business
equipment, securities, and so on),
liabilities (e.g. credit card accounts, invoices received that need
to be paid, and so on), equity (e.g. outstanding shares), revenues
(e.g. for services rendered, for goods sold, or interest received),
and expenses (e.g. for goods bought, for travel costs, or for
interest paid).
.Pp
Define such accounts as are meaningful for the purpose of the
specific bookkeeping in question.
Many standardized systems of accounts exist;
using one of them may help clarity and consistency,
but it is not required.
Even when using a standardized system of accounts, it is typically
sufficient to define and use only a small subset of the accounts
specified by the standard.
.Pp
The meaning of the sign certainly needs getting used to:
.Pp
.Bl -column "account class" -compact
.It Em account class Ta Em meaning of the sign
.It assets           Ta property owned has negative sign
.It equity           Ta property owned has positive sign
.It liabilities      Ta debt owed has positive sign
.It revenues         Ta incoming payments have positive sign
.It expenses         Ta outgoing payments have negative sign
.El
.Pp
Accounts are defined in
.Xr pta-accounts 5
and the content of accounts can be displayed with
.Xr pta 1
.Fl a .
.It Em journal entry
A record containing the same fields as an account entry,
but two account numbers in addition, called the
.Dq debit account
and the
.Dq credit account ,
always cited in this order.
A journal entry describes an elementary business transaction,
in the sense that it subtracts the amount from the debit account
and adds the same amount the credit account.
For example, when paying off a debt, the debit account would typically
be a liability account (subtracting something there means reducing
the debt) and the credit account would typically be an asset account,
usually a bank account (adding something there corresponds to
reducing the bank balance).
.Pp
Creating a journal entry implicitly creates a corresponding account
entry on the debit account, inverting the sign of the amount, and
another corresponding account entry on the credit account, with the
amount having the same sign as in the journal entry.
Consequently, creating a journal entry always leaves the sum of all
accounts constant, and since that sum starts at zero, it always
remains zero.
.Pp
Complex business transactions \(em for example purchases including
sales tax or buying items of diverse kinds in a single transaction \(em
are typically represented using multiple journal entries.
.It Em journal
A list of journal entries, ordered chronologically.
It is typically used to represent all business transactions that
occurred during one accounting period, typically during one year.
.Pp
The format of the journal file is documented in
.Xr pta-journal 5 .
.It Em subaccount
A subaccount is a subset of the account entries of an account.
Each subaccount is uniquely identified by the pair (account number,
subaccount name).
For example, an expense account for fruits might contain subaccounts
for purchases of apples and oranges.
Currently, subaccounts cannot be divided further.
For example, a sub-subaccount for Granny Smith within the subaccount
for apples is not supported.
.Pp
While accounts need to be predefined in the file
.Pa accounts.txt
before they can be used in the journal, an important advantage of
subaccounts is that they can be used spontaneously.
As soon as at least one account entry is associated with a subaccount,
that subaccount exists.
.Pp
An account entry can either be part of exactly one subaccount,
or it can be outside all subaccounts.
For example, a shipment containing both apples and oranges should
probably be split into two entries, such that each entry can be
associated with the appropriate subaccount.
On the other hand, a surprise shipment of martian lichen leaves
the choice of either booking it without specifying any subaccount,
for example because such exotic merchandise is not expected to
arrive again, or of creating a subaccount for martian lichen
on the spot.
.Pp
The content of subaccounts can be displayed with
.Xr pta 1
.Fl s .
.It Em cost center
A cost center is a set of journal entries.
Consequently, while a subaccount is restricted to one single account,
a cost center always spans multiple accounts.
Use cost centers to track the balances
of parts of the bookkeeping separately.
For example, if a company has a number of branch stores,
one might create a cost center for each branch store
and another one for the head office.
As another example, if a company has a number of very different
product lines, one might create one cost center for each product
line.
There is no rigid prescription how cost centers can be used;
any set of journal entries can be defined as a cost center.
Currently, cost centers need to be disjunct and cannot be subdivided.
.Pp
Cost centers are also used to manage financial investments.
Create one cost center for each security, and book all related
transactions to that cost center, including purchases, sells,
payments of interest or dividend, surcharges, fees, and taxes.
This allows tracking the performance of each security individually.
.Pp
Account lists and balance sheets for cost centers
can be displayed with
.Xr pta 1
.Fl c ,
and profits and losses can be shown with
.Xr pta 1
.Fl p .
.El
.Sh SEE ALSO
.Xr pta 1 ,
.Xr pta-accounts 5 ,
.Xr pta-journal 5
.Sh AUTHORS
.An Ingo Schwarze Aq Mt schwarze@openbsd.org