WO2002003300A1 - A plus-minus method of dual-entry accounting - Google Patents
A plus-minus method of dual-entry accounting Download PDFInfo
- Publication number
- WO2002003300A1 WO2002003300A1 PCT/US2001/041195 US0141195W WO0203300A1 WO 2002003300 A1 WO2002003300 A1 WO 2002003300A1 US 0141195 W US0141195 W US 0141195W WO 0203300 A1 WO0203300 A1 WO 0203300A1
- Authority
- WO
- WIPO (PCT)
- Prior art keywords
- data
- net worth
- providing
- business
- ledger
- Prior art date
Links
Classifications
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q40/00—Finance; Insurance; Tax strategies; Processing of corporate or income taxes
- G06Q40/02—Banking, e.g. interest calculation or account maintenance
Definitions
- This invention relates to a method of maintaining accounting records using double entry bookkeeping without using debits and credits.
- This invention utilizes a common sense approach to bookkeeping that will make sense to non-accountants.
- the basic system of accounting was invented by Luca Pacioli, a Franciscan monk, in 1494. He invented what is known as the "double-entry system of accounting". The basic elements of the double-entry system have remained virtually unchanged since then. This system utilizes debit and credit entries. Every debit has to have a corresponding credit so that the debits and credits are equal.
- the current invention addresses the shortcomings of current accounting systems by making accounting a useful information tool for the businessperson.
- the foundation of the system is the division of business transactions into three categories: positive transactions; negative transactions; and neutral transactions.
- a positive transaction is a transaction that increases the net worth of the business. Receipt of cash when a sale is made is an example of a positive transaction. Positive transactions are recorded with pluses. In the example above, cash is deposited and it increases the bank account. Sales are recorded and the net income increases. Both sides of this transaction are handled with an addition to each account. The plus represents that the company is stronger after the transaction than before the transaction.
- a negative transaction is a transaction that decreases the net worth of the business, such as when cash is spent to pay an expense. Negative transactions are recorded with minuses. In the example above, cash is spent and it decreases the bank account. Expenses are recorded and the net income decreases. Both sides of this transaction are handled with a deduction from each account. The minus represents that the company is weaker after the transaction than before the transaction.
- a neutral transaction is a transaction that does not change the net worth of the business.
- Neutral transactions are recorded with one plus and one minus.
- cash is deposited and it increases the bank account.
- a plus is used to record the increase in the cash account.
- Money is borrowed so a minus is used to reflect the negative position with the lending institution.
- the company is no stronger or weaker than before the transaction, which is illustrated by the plus and minus offsetting each other.
- Net Worth Accounts are the accounts shown on a balance sheet in current accounting methods. Those accounts reflect the assets and liabilities of the business.
- the accounts with a positive balance are assets.
- the accounts with a negative balance are nubilities. If the accounts with positive balances are greater than the accounts with negative balances, the business shows a positive net worth.
- the accounts with a positive balance are income accounts.
- the accounts with a negative balance are expense accounts. If the accounts with positive balances are greater than the accounts with negative balances, the business shows a profit for the current year.
- the accuracy of the books can be verified by determining the difference in the "Net Worth Accounts” at the present time as compared to the "Net Worth Accounts” at the beginning of the current year. This difference should equal the total of the "Change in Net Worth Accounts.” For example, if the "Net Worth Accounts” (assets and liabilities) have increased by $300,000 from the beginning of the year, the "Change in Net Worth Accounts” should show a positive balance of $300,000.
- each transaction would be data.
- the application would deal with each piece of data, storing the information in the appropriate column of a spreadsheet or table of a database in order to allow the balances as described above to be displayed.
- a simple computer program guarantees that a plus to a "Net Worth Account” is accompanied by a plus to a "Change in Net Worth Account” (in a positive transaction) or a minus to another "Net Worth Account” (in a neutral transaction).
- this same program guarantees that a minus to a "Net Worth Account” is accompanied by a minus to a "Change in Net Worth Account” (in a negative transaction) or a plus to another "Net Worth Account” (in a neutral transaction).
- Figure 1 illustrates the process of recording and verifying a positive transaction
- Figure 2 illustrates the process of recording and verifying a negative transaction
- Figure 3 illustrates the process of recording and verifying a neutral transaction
- Figure 4 illustrates a ledger of exemplary transactions of Change in Net Worth Accounts
- Figure 5 illustrates a ledger of exemplary transactions of Net Worth Accounts for asset accounts
- Figure 6 illustrates a ledger of exemplary transactions of Net Worth Accounts for liability accounts.
- the present invention of a Plus-Minus Method of Accounting is based on classification of all transactions as positive, negative, or neutral and properly recording such transactions in a ledger.
- the method begins at Start (11) where the user must determine "Is this a positive transaction" (12).
- a positive transaction is a transaction that increases the net worth of the business. Receipt of cash when a sale is made is an example of a positive transaction. Positive transactions are recorded with pluses. If it is not a positive transaction the user will proceed to the inquiries illustrated in Figure 2 (step 13). If the transaction is positive, three steps are required to enter the transaction. First, the user must "Determine Which Net Worth Account” (14) is affected by the transaction. Second, the user must "Determine Which Change in Net Worth Account” (15) is affected by the transaction. Third, the user must increase the Net Worth Account and the Change in Net Worth Account (16).
- the next step is to Verify the Entries (17).
- This step can be performed manually or by a simple computer program.
- the verification consists of calculating the difference in the current value of the total Net Worth Accounts and the value of the total Net Worth Accounts at the beginning of the current year.
- the Verified step (18) will determine if this difference equals the total Change in Net Worth Accounts. If the difference equals the total Change in Net Worth Accounts, the Entry is verified and this Entry is Complete (19). If the difference is not equal to the total change in Net Worth Accounts, there is an Error (20). To resolve the error, the Net Worth Account and the Change in Net Worth Account must be decreased by the amount of the transaction, and the process must be restarted to correctly enter the transaction.
- a negative transaction is a transaction that decreases the net worth of the business, such as when cash is spent to pay an expense. Negative transactions are recorded with minuses.
- the method begins at step (21) after step (13) from Figure 1, wherein the user determined the transaction was not positive. The user determines "Is this a negative transaction" (22). If it is not a negative transaction the user will proceed to the inquiries illustrated in Figure 3 (23). If the transaction is negative, three sequential steps are required to enter the transaction. First, the user must "Determine Which Net Worth Account” (24) is affected by the transaction. Second, the user must "Determine Which Change in Net Worth Account” (25) is affected by the transaction. Third, the user must "Decrease the Net Worth Account and the Change in Net Worth Account” (26).
- the next step is to Verify the Entries (17).
- This step can be performed manually or by a simple computer program.
- the verification consists of calculating the difference in the current value of the total Net Worth Accounts and the value of the total Net Worth Accounts at the begmi ing of the current year.
- the Verified step (18) will determine if this difference equals the total Change in Net Worth Accounts. If the difference equals the total change in Net Worth Accounts, the Entry is verified and this Entry is Complete (19). If the difference is not equal to the total Change in Net Worth Accounts, there is an Error (29). To resolve the error, the Net Worth Account and the Change in Net Worth Account must be increased by the amount of the transaction, and the process must be restarted to correctly enter the transaction by Returning step (30), which returns the user to Start (11) of Figure 1.
- a neutral transaction is a transaction that does not change the net worth of the business.
- Neutral transactions are recorded with one plus and one minus.
- the user determines that the transaction is not negative the user moves to the steps outlined in Figure 3 from Figure 2 (31). Because the user has previously determined that the transaction is not positive (12) and not negative (22), the only remaimng option is that the Transaction is Neutral (32). The user must then determine which "Net Worth Accounts" are affected (33) or which "Change in Net Worth Accounts" are affected (34). The next step is to determine if one of the Net Worth Accounts increase (35) as a result of the transaction.
- the next step is to Verify the Entries (17).
- This step can be performed manually or by a simple computer program.
- the verification consists of calculating the difference in the current value of the total Net Worth Accounts and the value of the total Net Worth Accounts at the beginning of the current year.
- the Verified step (18) will determine if this difference equals the total Change in Net Worth Accounts. If the difference equals the total change in Net Worth Accounts, the Entry is verified and this Entry is Complete (19). If the difference is not equal to the total change in Net Worth Accounts, there is an Error (39). To resolve the error, if one of the Net Worth Accounts was increased it must be decreased and the Net Worth Account that was decreased must be increased.
- Company depreciates its equipment at $90 (see Figures 4 and 5); 9. Company pays its shareholders dividends in the amount of $50 (see Figures 4 and 5); 10. Company pays $80 of its long-term debt (see Figures 5 and 6); 11. Company pays $40 of interest on its outstanding debt (see Figures 4 and 5).
- Figures 4-6 further illustrate the final balances in the general ledge accounts.
- the ledger example illustrates that the company has increased it net worth by $220, from $600 to $820.
Abstract
Description
Claims
Priority Applications (4)
Application Number | Priority Date | Filing Date | Title |
---|---|---|---|
JP2002507295A JP2004502260A (en) | 2000-06-30 | 2001-06-27 | Double entry bookkeeping method |
AU2001279271A AU2001279271A1 (en) | 2000-06-30 | 2001-06-27 | A plus-minus method of dual-entry accounting |
EP01957536A EP1314117A4 (en) | 2000-06-30 | 2001-06-27 | A plus-minus method of dual-entry accounting |
CA002415161A CA2415161A1 (en) | 2000-06-30 | 2001-06-27 | A plus-minus method of dual-entry accounting |
Applications Claiming Priority (2)
Application Number | Priority Date | Filing Date | Title |
---|---|---|---|
US60774600A | 2000-06-30 | 2000-06-30 | |
US09/607,746 | 2000-06-30 |
Publications (1)
Publication Number | Publication Date |
---|---|
WO2002003300A1 true WO2002003300A1 (en) | 2002-01-10 |
Family
ID=24433550
Family Applications (1)
Application Number | Title | Priority Date | Filing Date |
---|---|---|---|
PCT/US2001/041195 WO2002003300A1 (en) | 2000-06-30 | 2001-06-27 | A plus-minus method of dual-entry accounting |
Country Status (5)
Country | Link |
---|---|
EP (1) | EP1314117A4 (en) |
JP (1) | JP2004502260A (en) |
AU (1) | AU2001279271A1 (en) |
CA (1) | CA2415161A1 (en) |
WO (1) | WO2002003300A1 (en) |
Cited By (1)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
CN115760408A (en) * | 2022-11-22 | 2023-03-07 | 中电金信软件(上海)有限公司 | Transaction data processing method and device and accounting server |
Citations (3)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
US5193055A (en) * | 1987-03-03 | 1993-03-09 | Brown Gordon T | Accounting system |
US5832461A (en) * | 1985-08-27 | 1998-11-03 | Trans Texas Holdings Corporation | System and method of investment management including means to adjust deposit and loan accounts for inflation |
US6275813B1 (en) * | 1993-04-22 | 2001-08-14 | George B. Berka | Method and device for posting financial transactions in computerized accounting systems |
-
2001
- 2001-06-27 AU AU2001279271A patent/AU2001279271A1/en not_active Abandoned
- 2001-06-27 CA CA002415161A patent/CA2415161A1/en not_active Abandoned
- 2001-06-27 EP EP01957536A patent/EP1314117A4/en not_active Withdrawn
- 2001-06-27 WO PCT/US2001/041195 patent/WO2002003300A1/en not_active Application Discontinuation
- 2001-06-27 JP JP2002507295A patent/JP2004502260A/en active Pending
Patent Citations (3)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
US5832461A (en) * | 1985-08-27 | 1998-11-03 | Trans Texas Holdings Corporation | System and method of investment management including means to adjust deposit and loan accounts for inflation |
US5193055A (en) * | 1987-03-03 | 1993-03-09 | Brown Gordon T | Accounting system |
US6275813B1 (en) * | 1993-04-22 | 2001-08-14 | George B. Berka | Method and device for posting financial transactions in computerized accounting systems |
Non-Patent Citations (1)
Title |
---|
See also references of EP1314117A4 * |
Cited By (1)
Publication number | Priority date | Publication date | Assignee | Title |
---|---|---|---|---|
CN115760408A (en) * | 2022-11-22 | 2023-03-07 | 中电金信软件(上海)有限公司 | Transaction data processing method and device and accounting server |
Also Published As
Publication number | Publication date |
---|---|
CA2415161A1 (en) | 2002-12-27 |
JP2004502260A (en) | 2004-01-22 |
AU2001279271A1 (en) | 2002-01-14 |
EP1314117A1 (en) | 2003-05-28 |
EP1314117A4 (en) | 2006-02-01 |
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