I kept digging and digging on a "sell some lemonade for $5" example, and ended up at:
- $5 debit to cash (asset => debit means +5)
- $5 credit to revenue (equity => credit means + 5)
- $X debit to cost of goods sold (liability => debit means - X)
- $X credit to inventory (asset => credits mean - X)
A double-entry for the money, and a double-entry for the inventory, for a total of 4 entries.
It's too complicated for me. I'd model it as a Sale{lemonade:1,price:$5} and be done with it. Nothing sums to zero and there's no "Equity + Income + Liabilities = Assets + Expenses" in my version.
But this is HN, and I think a lot of people would call my way of doing things "double" because it has both the lemonade and the money in it. So when I say I'm not sold on doing actual double-entry [https://news.ycombinator.com/item?id=42270721] I get sweet down-votes.
if you’re just doing first-party sales, the single-entry model you described is probably fine!
but every startup these days wants to become a marketplace where you are facilitating multiple third-party lemonade vendors and taking a cut for letting them use your platform. In that case, the flow of money quickly gets too hard to understand unless you have double-entry
I kept digging and digging on a "sell some lemonade for $5" example, and ended up at:
A double-entry for the money, and a double-entry for the inventory, for a total of 4 entries.It's too complicated for me. I'd model it as a Sale{lemonade:1,price:$5} and be done with it. Nothing sums to zero and there's no "Equity + Income + Liabilities = Assets + Expenses" in my version.
But this is HN, and I think a lot of people would call my way of doing things "double" because it has both the lemonade and the money in it. So when I say I'm not sold on doing actual double-entry [https://news.ycombinator.com/item?id=42270721] I get sweet down-votes.