Re: GAAP (was Re: Patch for serious bug in LedgerSMB 1.2.16)

[Chris Bennett <..hidden..>]

Chris Travers wrote:
> The short version of my last post is that I don't like building
> accounting systems where there are no clearly defined right numbers
> that are supposed to come out of it.  Once we get off the basic GAAP
> (FASB/IASB common ground and accepted processes),* it becomes
> impossible to define exactly how the accounting program is supposed to
> behave mathematically without covering new ground.  The last thing one
> wants is for accounting logic and mathematics to be "innovative."
>
> The solution is to stop thinking "I want to repost invoices" for
> example, and shift this to "I want an easy way to correct a mistake in
> an invoice."  The first statement will get us nowhere really fast, but
> the second one is productive and we can do what is necessary to meet
> that need.
>
> Best Wishes,
> Chris Travers
>
> * Where the FASB and IASB disagree, the issues involved usually are
> those which involve what adjustments are proper.  Also this is not
> intended to disparage users in countries with really WEIRD rules
> regarding things like tracking foreign currency gains and losses,
> which are not adjustment based.  In those cases, however, local
> patches are probably going to be required.
>
>
>   
Although my day to day practical accounting experience is limited,
I did take two accounting courses in college.
Not very useful at a practical, usability level, but I do understand how
critically important following GAAP is.

Accounting is often used to assist doing taxes, but its real value is in
correctly understanding what is working and what is failing in a business.

GAAP standards were not lightly decided upon. I see little use for an 
accounting system
that fails to tell me the truth. I may like doing this sort of job or 
dislike
that other sort, but good accounting will tell me whether to abandon 
something I like
or if I should just toughen up and do those profitable, yet unpleasant jobs.

I do lots of drywall repairs. I do not like that work. But it is a 
critical aspect of my
business. It is profitable and also brings in a large amount of related 
work that I do like.

There only SEEMS to be an ugliness to reversals. Actually, there is a 
beauty to it.
By recording every step, even the mistakes, the books will be trustworthy.

As Chris suggested, a one button, quick reversal system would be great.
Perhaps there may be a way of excluding the mistaken and their reversed 
transactions from informal reports (but never from formal reports).

Chris Bennett

--
A human being should be able to change a diaper, plan an invasion,
butcher a hog, conn a ship, design a building, write a sonnet, balance
accounts, build a wall, set a bone, comfort the dying, take orders,
give orders, cooperate, act alone, solve equations, analyze a new
problem, pitch manure, program a computer, cook a tasty meal, fight
efficiently, die gallantly. Specialization is for insects.
  -- Robert Heinlein