Finances is an accounting software based on double-entry bookkeeping. Double-entry bookkeeping is the most popular bookkeeping system and is used for personal and business accounting. In traditional double-entry bookkeeping the terms credit and debit are used instead of negative values. Finances is different and uses negative values instead of credits and debits. This concept is inspired by ledger-cli – I highly recommend their documentation.
In Finances money flows from one account to another account.
Let’s say you pay $12 for pizza in cash. The cash account is reduced by $12 and the food account is increased by $12. In other words: money is transfered from the Cash account to the Food account.
A textual representation of the transaction looks like this.
12016-09-15 Pizza 2 Assets:Cash -$12 3 Expenses:Food $12
You can also see that the Cash account is grouped under Assets, and the Food account under Expenses. In Finances accounts must be in one of the following groups: Assets, Liabilities, Income, Expenses and Equity. Learn more about accounts.
Let’s take a look at another example where the salary of $2.000 is transfered to the bank account.
12016-09-16 Salary 2 Assets:Bank $2.000 3 Income:Salary -$2.000
This example illustrates that the amount of $2.000 is substracted from the Salary income account. This may look wrong at first but actually makes sense because money cannot come from nowhere. In Finances an income reduces the respective income account. In contrast an expense increases the expense account.