[ebolyen]

I see a lot of consternation about credits and debits and the nomenclature.

Something that makes this simpler to think about from a modern perspective is that accounting is older than the popular use of negative numbers. By a lot. If we were to invent accounting today, we'd probably use positive and negative accounts instead of debit and credit accounts.

Algebra over addition is second nature to us at this point, but it would not have been obvious to the average merchant in 1604, and even then, negative numbers were viewed quite poorly.

What is important is that there are always two sides to a transaction and that they are inverses of each other. This is all a credit and debit are. Inverse operations on a number.

Therefore, we can make a rule that a transaction balances when credit = debit. (aka we didn't invent money as debit + credit = 0, but remember that we didn't like negative numbers when this system was invented, so this last fact is more of a happy coincidence that happens to ALWAYS WORK, for some reason, rather than the goal).

What is then reasonable is to consider literal cash on hand to be the most positive (debit) kind of account there can be, and work backwards from there. If I want to handle an expense, then I need to invert the cash account somehow (credit it) and therefore have the opposite kind of entry for where the money went (debit it). So an expense account must have a generally debit (or positive) balance.

But where did the cash come from? Well that comes from income and I want the cash to be debit-ey so the place it came from must be credit-ey otherwise I risk writing a transaction that doesn't balance (equal zero). So then income accounts must generally be credit accounts rather than debit account (aka they hold a typically negative balance or are "credit normal").

What is really killer about this system, is it just so happens that every mundane transaction you could ever write will end up as balanced transactions and each of these possible transaction accounts end up having the same usual balance of credit or debit (negative or positive). I think that is just so elegant.

[EvanAnderson]

I enjoy using the alliteration of "Capital" and "Credit" to remember the normal balance of the capital/equity accounts. Memorizing that and the accounting equation is all that's necessary to derive the normal balances of every other account type.

[yandrypozo]

nice trick, thanks!

[IssaRice]

I don't think it really helps to use negative numbers (e.g. thinking of income as negative is very confusing). I started a discussion [1] on the PTA subreddit about a month ago about how to make PTA syntax more intuitive, and someone suggested using arrows to mark the "from" (aka credit, or negative) and "to" (aka debit, or positive) accounts. The numbers are unsigned and the terms "credit" and "debit" aren't used, and I think it's way more intuitive.

[1]: https://www.reddit.com/r/plaintextaccounting/comments/1bh3x7...

[omichowdhury]

I don’t think you need to think of income accounts as negative if the ledger you use enforces an updated accounting equation that also uses negative numbers, See https://news.ycombinator.com/item?id=40021506

[ChirronT447]

It's good to read there is consternation about the debits/credits nomenclature because I am definitely confused.

Interesting context on negative numbers, thanks for that!