Comment by omichowdhury
2 years ago
Nope, in these examples the +Asset on the left means you received say cash. The right side shows various ways to balance that out based on the accounting equation
I did an explanation with numbers here: https://news.ycombinator.com/item?id=40021506
> in these examples the +Asset on the left means you received say cash.
Ah. So... where is the value of the lemonade before you sold it? Wasn't that an asset before you sold it?
I guess technically this would be selling a service instead of a good.
I was going through the 4 combinations of balanced two-line entries, based on the accounting equation, to show how it helps when thinking through how to record something.
If you get into more than two lines, then yup selling a good would be
or if you include sales tax and son shipping costs:
Using an updated accounting equation and negative numbers is a lot more intuitive than credits and debits. In this larger example it tells you:
It tells you what types of accounts balance, with a syntax that matches your intuitions: more asset = good, less asset = bad, more expense = bad, less expense = good.
> I guess technically this would be selling a service instead of a good.
LAAS!
Sorry, no, lemonade is not a service. It is true that you are adding value by turning lemons into lemonade, but that's not what you're selling. You're selling the lemonade. LAAS would be turning someone else's lemons into lemonade for them, but a typical lemonade manufacturer owns their raw materials.
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