33 lines
1.9 KiB
Markdown
33 lines
1.9 KiB
Markdown
# Glossary
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For agents (and humans) new to accounting. The engine's naming follows these
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definitions exactly.
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- **Debit / Credit** — The two sides of every journal line. Not "good" and
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"bad": debit = left, credit = right. What they *do* depends on the account
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type (see normal balance).
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- **Normal balance** — The side that increases an account. Assets and expenses
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are debit-normal (a debit increases them); liabilities, equity, and revenue
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are credit-normal. `AccountType::normal_side()`.
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- **Chart of accounts** — The registry of all accounts, organized by code
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(e.g. `1000` Cash, `6000` Rent Expense). Five types, no more.
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- **Journal entry** — A set of balanced lines with a date and description.
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The atomic unit: it posts whole or not at all.
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- **Ledger** — The books: the chart plus the append-only log of posted
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entries. (In this codebase `Ledger` is also the command surface.)
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- **Posting** — Validating a draft entry and appending it to the log.
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One-way.
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- **Trial balance** — A listing of every account's debit or credit balance.
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Total debits must equal total credits; if they don't, the books are broken.
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- **Balance sheet** — Assets = Liabilities + Equity, at a point in time.
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- **Profit & loss (income statement)** — Revenue − Expenses = Net income,
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over a period.
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- **Reversing entry** — An entry that exactly undoes a posted entry (same
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lines, sides flipped), linked to the original. The correction mechanism.
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- **Placeholder account** — A header in the chart (e.g. "Current Assets")
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that organizes other accounts but takes no postings itself.
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- **Closing the books** — Period-end ritual: move revenue/expense balances
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into retained earnings so the new period starts clean. (Future: R-FUTURE-2.)
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- **Current earnings** — Net income to date on an unclosed book. We fold it
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into equity so the accounting equation holds before close.
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