[jimnotgym]

> But it’s the 21st century and we have negative numbers now - why not just use positive and negative numbers? Using positive and negative numbers gets ambiguous.

In computerised accounting it is completely normal to use negative numbers for credits and positive numbers for debits. That way a whole trial balance sums to zero. Very neat indeed.

What is missing above is the concept of accounts to put the balance in. For instance if I have a loan I put it in an account called 'loan', and list it on my balance sheet as a creditor. It will always have a negative balance. If it doesn't there is a problem.

Alice from above owes me 5 bucks so goes in the debtors (or receivables account).

I owe bob five bucks it goes into creditors (or payables)

One classic piece of error checking is to review debtors for credit balances. It means someone has overpaid, needs a refund or screwed up posting it.

[candiddevmike]

What you're describing is accrual accounting (accounts payable/receivable). It is one method of bookkeeping, but a lot of other businesses tend to use cash (which deals in absolutes, you spent 5, you earned 5, etc).

[barking_biscuit]

You can model the data in such a way that the recorded transactions can be reported on in either accrual or cash basis.

[candiddevmike]

Not sure what you mean, as far as I know the government requires businesses to pick one form and stick to it. Unless you're building accounting software you'd have no need to support both ways.

[barking_biscuit]

I build accounting software.

[EvanAnderson]

It’s common for US businesses to file taxes on cash basis but use accrual for managerial accounting.