[kgwgk]

> Money in your bank account is _negative_.

Say I have two million dollars and deposit one million in the bank and buy a one million house.

What is the value of my assets? -$2mn? $0mn? Something else?

The "confusing" answer would be that the value of my assets (which is equal to the value of my equity, as I don't owe anything to anyone) is two million dollars.

[sago]

In a conventional double accounting system:

  Deposit
  Asset>Cash in Hand CR$1m
  Asset>Bank: DB$1m

  House purchase
  Asset>Cash in Hand CR$1m
  Asset>Property: DB$1m

So all I'm suggesting is to use of negative numbers instead of tracking everything in terms of credits and debits.

  Deposit
  Asset>Cash in Hand $1m
  Asset>Bank: $-1m

  House purchase
  Asset>Cash in Hand $1m
  Asset>Property: $-1m

In either case the value of your assets at the end is unchanged, because you're just turning assets into different kinds of assets.

But let's say you started with DB$2m (inheritance say, or you won the lottery). You end with DB$2m assets.

I'm not reinventing anything here. Where do you want to label your $2m as 'debit' every time, or use negative numbers, either way is the same.

People do always struggle when learning accounting to comprehend how money in their assets is debit. Because they are so used to seeing 'credit' on their bank statements. But it is only credit because there was from the banks point of view.

[kgwgk]

I'm not talking about credits and debits. In the version of accounting I know the balance sheet (edit: I'm not talking about the transactions, I'm talking about the aggregate balance) says simply:

  ASSETS
  ======

  $1mn Cash (in the bank) 
  $1mn House
  ----
  $2mn

What does the balance sheet look like for you? -$1mn plus -$1mn, i.e. total assets -$2mn?

Is that less confusing than total assets being $2mn when you have two assets worth $1mn each?

[sago]

If the things you're doing are so simple that you don't have to worry about credit or debit, you are free to show it that way.

But if you are doing accounting, debits and credits and balancing is important.

So yes, if you are happy to ignore debit/credit/balanced books, you are welcome to view asset as $2m. And lots of the simple accounting software will show it that way.

But by the time you are having to understand different types of accounts and different types of money in it, I think it is easier to use negative numbers are rather than CR/DB.

[kgwgk]

Yes, balancing is important. That’s why I’d prefer to end with assets that make sense in the balance sheet (or maybe you're happy to ignore balance sheets and don't want meaningful numbers?). I don’t see what do you gain by making the assets negative.

Believe it or not, I’ve seen financial accounts quite more complex than two lines (and they never included those CR/DB annotations in the balance sheets or income statements).

[sago]

This has been an interesting conversation with several people. I am really surprised how much negative numbers are confusing or interpreted as my idiosyncrasy.

> I’ve seen financial accounts quite more complex than two lines

Definitely.

For hundreds of years the convention has been columns. Credit values in the right-hand column, debit values in a left-hand column. The column is the label of which type of money it is. Most accountancy software (other than very simple personal tracking apps) use this when displaying.

Your printed bank statement probably does (and it may label the columns credit and debit as well, though never line by line, iirc). Mine did back when paper was the thing.

Digital bank statements usually do use negative numbers (DB being negative, as I've been saying). You are used to seeing this, but not used to thinking in your own accounting terms rather than theres. Which is fine. But there is a reason that accountancy education has to undo that assumption.

[kgwgk]

I have no problem with negative numbers.

But most people would find your idea of using negative numbers for assets rather idiosyncratic.

It's more natural to say that the assets of Goldman Sachs are $1trn than to say that they are -$1trn, for example.