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A FRESH Domestic Accounting Model predicated on Domestic Well-Being
Summary of Rationale and Technical Introduction

Other articles on Domestic Well-Being Accounting (DWBA) have hinted concerning the new ideas upon which this new domestic accounting model is situated. In this article, the rationale, ideas and concepts are summarised, in line with the coverage in a fresh book 'Accounting for an improved Life'.

Accounts

At its simplest, an account is just a list of transactions relating to some area of financial activity or interest. Probably the most familiar form of account may be the bank statement that customers periodically receive from their bank.

The first important thing to appreciate is that accounts are for accumulating information about value. We are very much accustomed to bank and charge card accounts which are all about currency that people sometimes do not realise that accounts are equally ideal for accumulating transaction details relating to, for example, our home, our car(s) - one take into account each car - our investments, etc.

Accounts will usually have two columns, one for increasing (+) amounts and another for decreasing (-) amounts.

The next important concept is to appreciate there are two distinct, overarching types of accounts that we may use inside our sets or books of accounts. One is named an asset account and the other is a liability account.

The asset type account as its name infers, typically pertains to storing transactions for assets such as bank accounts, houses, cars, etc. The theory behind that is that positive amounts entered in to the + column of an asset account signify increasing value; so �500 entered in to the + column of a secured asset account implies an increase in value of �500. However accountants may also have within their business accounts, what I call working makes up about home accounting, as other accounts of the asset type that are not strictly for an asset like a car or home. For example accounts for asset acquisitions and for depreciation.

That other overall kind of account is a liability account. serviços de contabilidade It is useful for accumulating debts and/or liability. Now we have the reverse concept for the reason that increasing amounts e.g. �300 in the + column of these types of accounts imply more debt or more liability, whilst a loss of �200 represents less of a debt. It might seem more debt means less value nonetheless it all depends on the purpose for which a liability account has been used.

Again, accountants mostly use liability type makes up about holding true debt amounts but again, have a need for other accounts of the liability type to mediate certain transactions. I refer to these as working accounts in home accounting as they do not relate to any true debts of a person or household; examples of they are for accumulating temporary information regarding asset acquisitions and growth in the worthiness of a home.

Another area for confusion here relates to the names for column headings used in the different software packages available to support accounting; running a business, the convention is that debits (the + column for asset accounts and the - column for liability accounts) are traditionally in the left-hand column of each account, with the credits on the right (the - column of asset accounts and the + column of liability accounts). This convention isn't always adhered to in a few software packages, together with not necessarily utilizing the headings, debit and credit.

Double Entry and the Accounting Equation

The last bit of theory to say which lies in the centre of DWBA accounting is so-called, double entry. This concept appears confusing to people since it has two aspects. First, it is an accounting concept which relates to an approach for taking into account (there's a proper phrase!) all the financial areas of some financial entity. In business, an entity may be a department or a division, a sole-trader or perhaps a whole plc.

For domestic accounting, such an entity would most often be an individual or a household. The point is that the accounts supporting these entities consider or model the totality of the financial areas of the entity. Therefore, the accounts should be able to capture and make visible both static and dynamic aspects of the entity finances.

The practical effect is that a set of double entry accounts (the books) requires an account to store the full total financial value of the entity in addition to usually, some makes up about accumulating periodic changes in terms of increases and decreases to this overall value. The result is what is termed a balanced group of accounts, linked to an accounting equ
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