[ChirronT447]

'Double-entry bookkeeping is very easy to understand once you ditch the ridiculous "credit" and "debit" terminology.'

I love it, let's do it!

Thank you this is very helpful.

The whole credit/debit terminology usage here is incredibly confusing to someone who hasn't studied accounting and many of the comments and replies to people who are confused are, while technically correct, simultaneously, unhelpful - to those not familiar with the terminology.

I read a comment earlier: "Why would my bank account be debited when the balance went up? Is a debit not negative? Is the cash balance presented as a negative?" And thought: "Yes! Great question! This doesn't make sense..because debits are always negative right? A direct debit takes money out, you spend money using a debit card, a debit is a debt right? So debits are always negative and debiting is always minus-ing money..." - but the replies, while technically correct weren't satisfying at all because they assumed knowledge.

It's both amusing and frustrating to watch people effectively speaking past each other like they're talking a different language. Especially when you have the same perspective as the person who is confused and trying to seek understanding. It seems like people nitpick on small points of what was said seemingly in order to be right.

[omichowdhury]

I think the fundamental problem is the traditional accounting equation:

  Assets + Expenses = Liabilities + Equity + Income

We try to group the accounts by left and right side and find a common term for them (credit-normal and debit-normal). But it’s really hard to come up with an intuitive answer for why Assets and Expense should be on one team, and why the rest should be on the other team. So we just pick some team names and say shut-up-and-calculate.

What if we re-arranged the equation to:

  Assets - Liabilities = Income - Expenses

The accounts on the left side track your net worth. The accounts on the right side track why net worth changes. What should be the names for the two sides? I call them State and Change.

You can then ditch credits and debits and ask - what is the impact of this financial transaction on my net worth? The equation will tell you which accounts should go up and go down using positive and negative numbers.

I go more into how this works here: https://news.ycombinator.com/item?id=39994335