Date: Wed, 06 Feb 2008 18:35:21 -0800
To: pgsql-sql@postgresql.org
From: Steve Midgley <public@misuse.org>
Subject: Re: accounting schema
Cc: "Medi Montaseri" <montaseri@gmail.com>
In-Reply-To: <20080207011622.390CE2E2F13@postgresql.org>
References: <20080207011622.390CE2E2F13@postgresql.org>
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At 05:09 PM 2/6/2008, pgsql-sql-owner@postgresql.org wrote:
>Date: Wed, 6 Feb 2008 17:08:54 -0800
>From: "Medi Montaseri" <montaseri@gmail.com>
>To: pgsql-sql@postgresql.org
>Subject: accounting schema
>Message-ID: 
><8078a1730802061708q17c72234xe61be822459a24a8@mail.gmail.com>
>
>Hi,
>
>I am learning my way into Accounting and was wondering how Accounting
>applications are designed. perhaps you could point the way....
>
>On one hand, accountants talk about a sacret equation A = L + OE 
>(Asset =
>Libility + Owner Equity) and then under each categories there are one 
>or
>many account. On the other hand a DBA thinks in terms of tables and
>relations. Instead of getting theoritical, allow me to setup an 
>example

Hi Medi,

You might read some source code and docs for open source accounting 
software and see "how it's done." Here's one example that might be 
interesting and simple enough to follow:

http://www.gnucash.org/

In general, I think there are many different accounting methods, so you 
have to get clear about which one you're using. "Double-entry" 
accounting is common. Cash vs. accrual posting methods matter (i.e. 
when does an expense or receivable "charge" against the assets 
balance?)

My most basic understanding is that in general you track assets as they 
come in, to an "Accounts Receivable" ledger (i.e. table) and 
liabilities to an "Accounts Payable" ledger. Then you reconcile these 
two "books" into a "General Ledger" table which gives you something 
like an audit trail of all activity (and a running balance). I'm sure 
Wikipedia will define these three terms and lots more with greater 
clarity.

But my (limited) experience with accounting schema is that they often 
involve these three tables (AR/AP/GL) at their core.

As you add bank accounts, complex investment instruments, depreciation 
etc, things get considerably more complex of course.

I'll readily admit my limited experience, and I'm sure others on this 
list have far better information. I hope this gets you started anyway.

Sincerely,

Steve