I’ve read that the development of double entry book keeping was very important, enabling less error in accounting, then driving significant gains in commerce. But reading this didn’t explain exactly why. Is it just the simple sum rule that ensured errors in transcription would (usually) quickly be caught? I’d guess automated accounting services today would be less prone to such errors — does that mean double entry is no longer as important as it once was?
I wrote a simple double entry bookkeeping program for myself, and I wanted to use as accurate terminology as possible. My native language is Swedish, and we have a word for the task of categorizing statements into accounts. Basically, when you look at a recipt and tell "this is for inventory, then I will use account X." In the past, you then wrote that down with a pen in a kind of inverted-T table that you had stamped on the receipt.
The Swedish word for that activity is "kontera", loosely translated to "accounting". But in English that is the word for the entire activity of keeping books up to date. Is there a word for the specialized task of identifying the accounts?<p>Edit: Wikipedia has articles for this word in Swedish, Danish and German. But no other languages. Puzzling.
Doible entry system is useful and reliable when you mainatain system for large business. If you have 100s of vendors and need to track balance between these vendors, then double entry system helps you to keep your account in check. The basic rule of having sum of different amounts in a transaction should be zero is simple and powerful in resolving conflicts.
Double entry accounting is useful any time you have limited amounts of a resource and want insight into how it is used. You don't need to apply it as strictly as accountants do -- very general categories and a random sample of transactions is fine for most types of analysis.<p>The important part is that every unit of resource comes from somewhere and goes to somewhere. As long as you fulfill that property, you get powerful querying capabilities.<p>Most recently I've used it to compare various means of acquiring more RAM for an operation (cloud offerings, incremental purchase, leasing large amounts, etc). One of the other benefits is that I can mix both "terabytes of memory" and "thousands of euros" in the same book, and exchange rates between the two also fall out of the equations.
I want to love the plain text accounting tools. I used them for over a year on all my finances. They’re incredibly expressive and exact, and they play well with vim and git.<p>The trouble is ingesting transactions. You do your best—save receipts, try to note things in your phone. Then some auto-pay thing blindsides you. Or, that separate tip charge from Uber Eats. Yes, you can capture all of these things, but it will require hours of weekly time investment to counteract financial entropy.<p>I ended up just buying Banktivity. I do miss the perfection offered by plain text accounting. I miss nothing now because they’ve contracted with teams that write scrapers and API clients for banks I would have otherwise had to write myself. Reconciliation is now the work of minutes. It’s not perfect, but everything is a tradeoff.
Developers understanding double entry well is critical to avoid what I call "programmers reinvent accounting principles". I stumble across this all the time as a major blocker trying to tightly integrate modern SaaS in to enterprise IT stacks.
> Moreover, posting a positive amount on an account is called “crediting” and removing from an account is called “debiting.”<p>I think they confused debit/credit here.
One interesting challenge I've been hearing a lot lately in accounting tech is that some accounts become a hotspot and slow down overall transactions. For example, you might take a commission on all transactions and you track that commission in a company-related account.<p>I'm curious how folks using a generic SQL or document database solve this.
What's the best tool to get started keeping track of our finances using double entry accounting?<p>Ideally, I'd love a tool that lets me import data from my credit card and/or bank accounts through something like Plaid rather than having to manually enter every transaction I make.