Comment by FredPret

It kind of works that way, it’s just confusing that the bank tells you their point of view.

Your bank account is really two accounts: an asset on your books, and a liability on the bank’s books.

When you talk about accounting for physical inventory, that’s a whole new can of worms.

The most popular way I see is this:

- you keep track of goods by their cost to you (not their value once sold)

- every time you buy item xyz, you increase an asset account (perhaps called “stock” and the transaction labeled “xyz”). You also keep track of the number of xyz. Say you buy 10 for $10 each, then another 10 for $20 each. Now you have 20 and your xyz is valued at $300. Average cost: $15

- every time you sell or lose some xyz, you adjust the number of xyz, and reduce the asset account by the average value of those items at the time of the transaction, or $15 in this example. The other account would be cost_of_goods_sold or stock_shrinkage.

Many other approaches also work.