Accounting for Computer Scientists

Two observations. First, coming from computer science, introductory accounting - the bookkeeping mechanics - is quite easy. I took a 101 class and was surrounded by future Lords of The Universe who complained about how "hard" it was to add and subtract numbers according to a small system of rules. Accounting is a system of metrics. The system under measurement is your business. Its purpose is to give an accurate readout of business performance. The nice thing is that accountants…

The fundamentals of accounting (in particular double-entry bookkeeping) are simple, but they're often presented or understood as a series of unconnected facts that must be memorized. It doesn't have to be this way! Start with this identity: Equity = Assets - Liabilities This is self-evident: the owners of the company have a claim on the company's assets, but only after any liabilities (like debts to other companies) have been subtracted. That identity can be rearranged: Assets = Equity + Liabilities…

I never understood double entry bookkeeping and that's where the author immediately loses me again: Early on after 4th diagram, author includes sentence : "Because every transaction appears twice, once positive and once negative" There is something so obvious about this to accounting folks that they always make the massive jump without any explanation. The previous diagram absolutely does not have positive and negative for each transaction! In fact, there is 5000 going into banking account and 500+5 coming out…

(2011) Previous discussion: https://news.ycombinator.com/item?id=2298471 Nice explanation even for people who have a good grasp of the basics. The visualization, seeing the flows is particularly interesting.