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1.2     ! schwarze   17: .Dd $Mdocdate: September 27 2020 $
1.1       schwarze   18: .Dt PTA-GLOSSARY 7
                     19: .Os
                     20: .Sh NAME
                     21: .Nm pta-glossary
1.2     ! schwarze   22: .Nd fundamental terms used for plain text accounting
1.1       schwarze   23: .Sh DESCRIPTION
                     24: The following terms are fundamental to understanding
                     25: .Xr pta 1
                     26: and are used consistently throughout the documentation:
                     27: .Bl -tag -width Ds
                     28: .It Em account entry
                     29: A record containing the following fields:
                     30: .Bl -tag -width Ds -compact
                     31: .It year
                     32: a four-digit unsigned integer
                     33: .It month
                     34: an integer in the range from 1 to 12
                     35: .It day
                     36: an integer in the range from 1 to 31,
                     37: typically used for the day of booking
                     38: .It id
                     39: a string which does not need to be unique,
                     40: typically used for booking identifiers or booking numbers
                     41: .It amount
                     42: a floating point number, with the currency always being the same
                     43: .It text
                     44: a string, typically used to state the purpose or the business partner
                     45: .El
                     46: .Pp
                     47: Account entries are used to describe all sorts of values (assets,
                     48: liabilities, and equity) and payments (both incoming and outgoing).
                     49: They can represent anything that has a well-defined monetary value.
                     50: .It Em account
                     51: A list of account entries, ordered chronologically.
                     52: Each account is uniquely identified by an unsigned integer number
                     53: called the account number.
                     54: Use accounts to collect entries that serve a common purpose.
                     55: Accounts can represent assets (e.g. cash in the wallet, bank accounts,
                     56: invoices issued to customers, stocks of goods, real estate, business
                     57: equipment, securities, and so on),
                     58: liabilities (e.g. credit card accounts, invoices received that need
                     59: to be paid, and so on), equity (e.g. outstanding shares), revenues
                     60: (e.g. for services rendered, for goods sold, or interest received),
                     61: and expenses (e.g. for goods bought, for travel costs, or for
                     62: interest paid).
                     63: .Pp
                     64: Define such accounts as are meaningful for the purpose of the
                     65: specific bookkeeping in question.
                     66: Many standardized systems of accounts exist;
                     67: using one of them may help clarity and consistency,
                     68: but it is not required.
                     69: Even when using a standardized system of accounts, it is typically
                     70: sufficient to define and use only a small subset of the accounts
                     71: specified by the standard.
                     72: .Pp
                     73: The meaning of the sign certainly needs getting used to:
                     74: .Pp
                     75: .Bl -column "account class" -compact
                     76: .It Em account class Ta Em meaning of the sign
                     77: .It assets           Ta property owned has negative sign
                     78: .It equity           Ta property owned has positive sign
                     79: .It liabilities      Ta debt owed has positive sign
                     80: .It revenues         Ta incoming payments have positive sign
                     81: .It expenses         Ta outgoing payments have negative sign
                     82: .El
                     83: .Pp
                     84: Accounts are defined in
                     85: .Xr pta-accounts 5
                     86: and the content of accounts can be displayed with
                     87: .Xr pta 1
                     88: .Fl a .
                     89: .It Em journal entry
                     90: A record containing the same fields as an account entry,
                     91: but two account numbers in addition, called the
                     92: .Dq debit account
                     93: and the
                     94: .Dq credit account ,
                     95: always cited in this order.
                     96: A journal entry describes an elementary business transaction,
                     97: in the sense that it subtracts the amount from the debit account
                     98: and adds the same amount the credit account.
                     99: For example, when paying off a debt, the debit account would typically
                    100: be a liability account (subtracting something there means reducing
                    101: the debt) and the credit account would typically be an asset account,
                    102: usually a bank account (adding something there corresponds to
                    103: reducing the bank balance).
                    104: .Pp
                    105: Creating a journal entry implicitly creates a corresponding account
                    106: entry on the debit account, inverting the sign of the amount, and
                    107: another corresponding account entry on the credit account, with the
                    108: amount having the same sign as in the journal entry.
                    109: Consequently, creating a journal entry always leaves the sum of all
                    110: accounts constant, and since that sum starts at zero, it always
                    111: remains zero.
                    112: .Pp
                    113: Complex business transactions \(em for example purchases including
                    114: sales tax or buying items of diverse kinds in a single transaction \(em
                    115: are typically represented using multiple journal entries.
                    116: .It Em journal
                    117: A list of journal entries, ordered chronologically.
                    118: It is typically used to represent all business transactions that
                    119: occurred during one accounting period, typically during one year.
                    120: .Pp
                    121: The format of the journal file is documented in
                    122: .Xr pta-journal 5 .
                    123: .It Em subaccount
                    124: A subaccount is a subset of the account entries of an account.
                    125: Each subaccount is uniquely identified by the pair (account number,
                    126: subaccount name).
                    127: For example, an account for fruits might contain subaccounts
                    128: for apples and oranges.
                    129: Currently, subaccounts cannot be divided further.
                    130: For example, a sub-subaccount for Granny Smith within the subaccount
                    131: for apples is not supported.
                    132: .Pp
                    133: While accounts need to be predefined in the file
                    134: .Pa accounts.txt
                    135: before they can be used in the journal, an important advantage of
                    136: subaccounts is that they can be used spontaneously.
                    137: As soon as at least one account entry is associated with a subaccount,
                    138: that subaccount exists.
                    139: .Pp
                    140: An account entry can either be part of exactly one subaccount,
                    141: or it can be outside all subaccounts.
                    142: For example, a shipment containing both apples and oranges should
                    143: probably be split into two entries, such that each entry can be
                    144: associated with the appropriate subaccount.
                    145: On the other hand, a surprise shipment of martian lichen leaves
                    146: the choice of either booking it without specifying any subaccount,
                    147: for example because such exotic merchandise is not expected to
                    148: arrive again, or of creating a subaccount for martian lichen
                    149: on the spot.
                    150: .Pp
                    151: The content of subaccounts can be displayed with
                    152: .Xr pta 1
                    153: .Fl s .
                    154: .It Em cost center
                    155: A cost center is a set of journal entries.
                    156: Consequently, while a subaccount is restricted to one single account,
                    157: a cost center always spans multiple accounts.
                    158: Use cost centers to track the balances
                    159: of parts of the bookkeeping separately.
                    160: For example, if a company has a number of branch stores,
                    161: one might create a cost center for each branch store
                    162: and another one for the head office.
                    163: As another example, if a company has a number of very different
                    164: product lines, one might create one cost center for each product
                    165: line.
                    166: There is no rigid prescription how cost centers can be used;
                    167: any set of journal entries can be defined as a cost center.
                    168: Currently, cost centers need to be disjunct and cannot be subdivided.
                    169: .Pp
                    170: Cost centers are also used to manage financial investments.
                    171: Create one cost center for each security, and book all related
                    172: transactions to that cost center, including purchases, sells,
                    173: payments of interest or dividend, surcharges, fees, and taxes.
                    174: This allows tracking the performance of each security individually.
                    175: .Pp
                    176: Account lists and balance sheets for cost centers
                    177: can be displayed with
                    178: .Xr pta 1
                    179: .Fl c ,
                    180: and profits and losses can be shown with
                    181: .Xr pta 1
                    182: .Fl p .
                    183: .El
                    184: .Sh SEE ALSO
                    185: .Xr pta 1 ,
                    186: .Xr pta-accounts 5 ,
                    187: .Xr pta-journal 5
                    188: .Sh AUTHORS
                    189: .An Ingo Schwarze Aq Mt schwarze@openbsd.org

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