Personal Accounts - Posting Table - Income as negative

[essaytee]

Just over a year ago I started out designing a schema for a personal finance/accounts system. I received a lot of help at that time, here's the thread. I wanted it to replace my reliance on Quicken. Since then, other things got in the way so I didn't progress it much further. Anyway, now I have some time and I've re-read all my notes to get back up to speed.

The following is the posting table:

tbl_Post
   Post_ID           pk
   Trans_ID         fk
   Account_ID      fk
   Unit_Price
   Unit_Quantity
   Reconcile_ID    fk

There will be at least two postings per transaction in order to zero out. My query relates to the handling of income/wages. I'm only using the one amount field as opposed to a debit and credit fields. My intention is to use the sign of the amount (positive or negative) for the system to work out the debit and credits.

In order to account for wages, the sign of the amount is negative and it's a positive amount hitting the bank account. It's the negative sign associated to wages that seems to be not quite right, though the transaction correctly balances back to zero.

I'd appreciate any suggestions (or confirmation).

 

[pbaldy]

As a reformed bean-counter I can confirm that income is normally a credit.

 

[MarkK]

Yeah, record your revenue with a minus sign in front. Think of it as the minus sign representing the reality of the person who payed you, so the money coming to you is a negative value at its origin (the revenue account), but a positive amount when it hits your bank account (the asset account).

 

[essaytee]

Thanks Paul & Mark.

After entering heaps of sample data, all seems in order. I just needed confirmation that I was applying the correct sign to the income amount.

 

[pbaldy]

No problem and good luck!

 

[gemma-the-husky]

double entry:

as far as a bank account goes, in OUR books, money going in is plus/debit, and out is minus/credit. So income is plus, and expenses are minus. In a true double entry system, there will be an opposite entry for each posting to the bank account in an income or expense account. Old ledgers did have a debit side (left), and a credit side (right), rather than a single column of pluses and minuses. We jokingly say the debit is the side nearest to the window!

In this sense, the money going in, which is plus in the bank, becomes minus in the income account, to make the double entry. money going out, which is minus in the bank account becomes a plus in the expense account.

The reason this might sound wrong, is because we think of ourselves as being "in credit", when we have money in the bank.

The reason for this, is that what we see in a bank statement is actually the bank's indebtedness to US. The BANK is IN CREDIT (minus) to us. In our books, the bank balance is a DEBIT. (plus). I hope this makes sense.

 

[Minty]

This is why accountants are a weird bunch... Everything is looked at sideways