33 posts tagged with "accounting"

Amortization spreads out payments to many installments over time. In beancount.io, you can use the plugin fava.plugins.amortize_over to achieve so.

Without amortization, if you want to insure your car for 6 months with costs of $600. You have to record this as a one-time expense for a particular date.

2017-06-01 open Assets:Bank:Checking
2017-06-01 open Assets:Prepaid-Expenses
2017-06-01 open Expenses:Insurance:Auto


2017-06-01 * "Pay car insurance"
    Assets:Bank:Checking       -600.00 USD
    Assets:Prepaid-Expenses

However, with amortization, you could allocate the expense over six months by putting plugin "fava.plugins.amortize_over" to the top of the file and using amortize_months: 6 for the transaction

plugin "fava.plugins.amortize_over"

2020-06-01 open Assets:Bank:Checking
2020-06-01 open Assets:Prepaid-Expenses
2020-06-01 open Expenses:Insurance:Auto

2020-06-01 * "Amortize car insurance over six months"
    amortize_months: 6
    Assets:Prepaid-Expenses       -600.00 USD
    Expenses:Insurance:Auto

And then in Journal, you will see the transaction is split into 6 postings.

2020-11-01 * Amortize car insurance over six months (6/6) am
2020-10-01 * Amortize car insurance over six months (5/6) am
2020-09-01 * Amortize car insurance over six months (4/6) am
2020-08-01 * Amortize car insurance over six months (3/6) am
2020-07-01 * Amortize car insurance over six months (2/6) am
2020-06-01 * Amortize car insurance over six months (1/6) am

We're excited to announce a major milestone in Beancount's evolution: the launch of our dedicated mobile apps for both iOS and Android platforms! This release directly addresses one of the most frequent requests from our community – the ability to manage your ledger efficiently on mobile devices.

Key Features​

• Quick Transaction Entry: Seamlessly add new transactions on the go
• Mobile Financial Reports: Access your financial insights anywhere, anytime
• Direct Ledger Editing: Full access to your ledger file through an optimized web view
• Cross-Platform Sync: Keep your financial data consistent across all your devices

Community-Driven Development​

This release marks just the beginning of our mobile journey. We're committed to evolving these apps based on your needs and feedback. Join our vibrant community on Telegram at https://t.me/beancount to discuss Beancount, share your experience, and help shape future features.

Our Vision​

At Beancount, our mission is to empower everyone to achieve better financial control and understanding. These mobile apps represent a significant step toward that goal, with many more exciting features and tools on our roadmap.

Why Modern Bookkeeping Matters​

Still managing your investments with spreadsheets? While spreadsheets are versatile, they can become cumbersome and error-prone as your investment portfolio grows. Enter Beancount.io – a sophisticated yet user-friendly investment tracking platform designed specifically for managing stock and cryptocurrency portfolios. Built with engineers and financial minimalists in mind, Beancount.io combines powerful features with an intuitive interface to streamline your investment tracking experience.

Double-entry Bookkeeping: The Foundation of Accuracy​

Beancount.io is built on the principles of double-entry accounting – a time-tested methodology used by financial institutions worldwide. This system ensures mathematical accuracy through a simple yet powerful concept: every financial transaction must balance perfectly.

In double-entry bookkeeping, each transaction requires at least two entries – a debit (+) and a credit (-) – across different accounts. This built-in verification system makes it virtually impossible to record unbalanced transactions, ensuring your financial records remain accurate and reliable.

1970-01-01 open Income:BeancountCorp
1970-01-01 open Assets:Cash
1970-01-01 open Expenses:Food
1970-01-01 open Assets:Receivables:Alice
1970-01-01 open Assets:Receivables:Bob
1970-01-01 open Assets:Receivables:Charlie
1970-01-01 open Liabilities:CreditCard

2019-05-31 * "BeancountCorp" "Salary of May 15th to May 31st"
  Income:BeancountCorp               -888 USD
  Assets:Cash                         888 USD

2019-07-12 * "Popeyes chicken sandwiches" "dinner with Alice, Bob, and Charlie"
  Expenses:Food 20 USD
  Assets:Receivables:Alice 20 USD
  Assets:Receivables:Bob 20 USD
  Assets:Receivables:Charlie 20 USD
  Liabilities:CreditCard -80 USD

As you can see in the two examples above, every transaction must fulfill the accounting equation.

Assets = Liabilities + Equity(aka Net Assets)

We used the Beancount syntax by Martin Blais and the web project Fava by Jakob Schnitzer to build this website. And it will alert you if any transaction has any legs not summing to zero.

Now you understand how we enforce the correctness of the ledger. But you may ask what are those "accounts"?

Understanding Accounts: The Water Bucket Analogy​

Think of your financial accounts as a system of interconnected water buckets, where money flows like water between them. This analogy makes double-entry bookkeeping intuitive: when you transfer money from one account to another, it's like pouring water from one bucket to another – the total amount of water (money) in the system remains constant.

Beancount.io introduces five kinds of accounts.

1. Income — Its amount is always negative or in debit. This is because you are making money, and then the money is debiting from "Income" account and crediting to your "Assets."
2. Expenses — Its amount is always positive or in credit. This is because you are spending money, and the money is flowing from the "Assets" or "Liabilities" to the "Expenses."
3. Liabilities — Its amount is positive or zero. Your credit card liabilities are a good example, which rises and falls in cycles.
4. Assets — Its amount is positive or zero. Your cash or houses are always worth some prices.
5. Equity — Your net assets. The system will calculate automatically for you. Equity = Assets - Liabilities and it reflects how wealthy you are.

Now you can open your customized accounts with those keywords above:

1970-01-01 open Assets:Cash
1970-01-01 open Assets:Stock:Robinhood
1970-01-01 open Assets:Crypto:Coinbase
1970-01-01 open Expenses:Transportation:Taxi
1970-01-01 open Equity:OpeningBalance

Advanced Investment Tracking with Commodities​

Beancount.io excels at tracking diverse investments, from stocks to cryptocurrencies. Let's explore how it handles complex investment scenarios. For example, here's how you would record purchasing 10 Bitcoins at $100 each in 2014:

2014-08-08 * "Buy 10 Bitcoin"
  Assets:Trade:Cash -1000.00 USD
  Assets:Trade:Positions  10 BTC {100.00 USD}

And then three years later, you sell them (originally with costs of $100 per unit annotated with {100.00 USD}) at the price of $10,000 per unit annotated with @ 10,000.00 USD.

2017-12-12 * "Sell 2 Bitcoin"
  Assets:Trade:Positions                   -2 BTC {100.00 USD} @ 10,000.00 USD
  Assets:Trade:Cash                          20,000.00 USD
  Income:Trade:PnL                          -19,800.00 USD

Or the same transaction with @@ 20,000.00 USD means that at the price of $20,000 in total.

2017-12-12 * "Sell 2 Bitcoin"
  Assets:Trade:Positions                   -2 BTC {100.00 USD} @@ 20,000.00 USD
  Assets:Trade:Cash                          20,000.00 USD
  Income:Trade:PnL                          -19,800.00 USD

The sum of all legs of the transaction, including -2 BTC {100.00 USD}, are still, as always, zero.

The costs {100.00 USD} tag is important because you might have bought the same commodity at different costs.

100 BTC {10.00 USD, 2012-08-08}
10 BTC {100.00 USD, 2014-08-08}

If you want to simplify the process, you can set up the account at the beginning with FIFO or LIFO. FIFO stands for first in, first out, while LIFO stands for last in, first out. In the US, IRS uses FIFO to calculate your PnL and tax accordingly.

1970-01-01 open Assets:Trade:Positions "FIFO"

And then when you sell it in shorthand like -2 BTC {}, beancount will apply FIFO strategy automatically and sell the oldest commodity.

Getting Started with Beancount.io​

Beancount.io is a modern cloud-based financial management platform that transforms your text-based transaction records into comprehensive financial statements, including income statements, balance sheets, and trial balances. By combining the reliability of plain text files with powerful visualization tools, Beancount.io helps you maintain precise control over your financial life while gaining valuable insights into your investment performance.

Start your financial journey with Beancount.io - Free during our promotional period!