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diff --git a/doc/GLOSSARY.md b/doc/GLOSSARY.md new file mode 100644 index 00000000..263a3cff --- /dev/null +++ b/doc/GLOSSARY.md @@ -0,0 +1,151 @@ +ACCOUNTING GLOSSARY +--- + + Accounting and bookkeeping represent an entire field of human effort and has + evolved its own specialized vocabulary. Accounting hopes to summarize and + add understanding to where the money is going. + +**Account**: A category for grouping together amounts from similar + transactions. Each account has a name, which is usually capitalized, and an + account type. Accounts are often organized into a hierarchy when it helps + understanding. For example, a coffee shop might have Coffee, Merchandise, + and Equipment as accounts but arranged under an Inventory account because + different decisions are made on the total inventory rather than just coffee. + A hierarchy can be part of the account name in Ledger, e.g., + "Assets:Inventory:Coffee". Note that the Ledger software usually creates + the list of accounts on the fly: accounts are created when transactions use + them. + +**Account Type**: Each account has a type of Asset, Liability, Equity, Income, + or Expense. Assets represent something owned, e.g., Cash or Inventory. + Liabilities represent sometime owed, e.g., a Loan or Mortgage. Equity, also + called capital, is everything owned minus everything owed (Assets - + Liabilities). It is the financial measure of how much you are ahead. + Income is money earned somewhere, which puts you more ahead. Expenses is + money spent somewhere, which puts you less ahead. The type of account + determines if a debit represents an increase or decrease in an account. For + example, Inventory is an asset so a transaction debiting Inventory would + increase its value. Assets and Expenses increase with debits and decrease + with credits; Liabilities, Equity, and Expenses increase with credits and + decrease with debits. + +**Journal**: A record of all the financial transactions of a person or firm. + This data of where money goes can be collated into reports. This used to be + done with a physical book, called a ledger, where each account was on one + page. Each debit or credit in the journal was transferred to the + appropriate account page and the pages were totaled to produce reports. + This process is now done with the Ledger software which creates reports from + the journal. A journal is sometimes called a register. + +**Posting**: A single debit or credit line of a transaction. A posting + comprises an account and the debit or credit amount. It also inherits the + shared description and date from the transaction. In the Ledger software, + a posting may also have metadata and an account state. + + +**Report**: A summary made from a journal of transactions. Each transaction + affects accounts and those effects are collated and totaled. The two most + common reports are the balance sheet, which shows what is owned and owed on + a specific date, and the cash flow statement, which shows how money was + earned and spent over a period. The cash flow statement is also called + a profit and loss statement or an income statement. + +**Transaction**: Our financial lives are recorded as a series of transactions. + Each transaction has a specific date, an equal total of debits and credits + affecting accounts, and some sort of description. For example, "On January + 1, pay $100 with check #243 from Checking to Utilities for my Verizon phone + bill" is a transaction. A credit of $100 decreases my Checking asset, while + a balancing debit of $100 increases my Utility expense. A transaction needs + at least two *postings*, meaning account debits or credits, but can be as + complicated as humans can make finances. + +LEDGER GLOSSARY +--- + +The Ledger software also has its own terms. + +**Automated Transaction**: a command directive that modifies subsequent + transactions that match an expression. An automated transaction can add + additional postings to a transaction, add metadata, or change transaction + amounts. Reports can be filter postings modified or generated by an + automated transaction. + [§ Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Automated-Transactions); + [§ Concrete Example of Automated Transactions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Concrete-Example-of-Automated-Transactions) + +**Command Directive**: a command in a journal file to change how subsequent + lines and transactions in a journal file are processed. Command directives + control processing, set default values for subsequent accounts and + transactions, or override parts of subsequent transactions. A directive + line begins with name of the directive and may have additional arguments or + additional indented lines. The single letters *AbCDhIiNOoY* are aliased to + other command directives, providing compatibility with the ancient past. + The characters **'='** and **'-'** are command directives for a automatic + transactions and periodic transactions, respectively. + [§ Command Directives](http://www.ledger-cli.org/3.0/doc/ledger3.html#Command-Directives) + +**Commodity**: any currency, stock, time or resource to be tracked + numerically. While many people only track money in Ledger, Ledger can track + different resources and manage rules to convert between them. The system is + flexible enough for the needs of very different users. Some track billable + time, converting minutes and hours into dollars. Others track multiple + currencies. Still others track the purchase and sale of stocks. Each + commodity is separate unless a conversion rule is given. + [§ Commodities and Currencies](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodities-and-Currencies); + [§ Currencies and Commodities](http://www.ledger-cli.org/3.0/doc/ledger3.html#Currency-and-Commodities); + [§ Accounts and Inventories](http://www.ledger-cli.org/3.0/doc/ledger3.html#Accounts-and-Inventories); + [§ Posting Cost](http://www.ledger-cli.org/3.0/doc/ledger3.html#Posting-cost) + *(and next ten sections)*; + [§ Commodity Reporting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Commodity-Reporting) + +**Effective Date**: an optional, second date information item in for a posting + or transaction. Some use the effective date for when work is billed or when + a check has cleared. The `--effective-date` option causes the effective + date to override the transaction's initial date for that report. + [§ Effective Dates](http://www.ledger-cli.org/3.0/doc/ledger3.html#Effective-Dates); + +**Journal File**: the text input file for ledger, sometimes called a register + file. A journal file is a series of transactions, command directives, and + comments. Command directives start with the single word name of the + directive at the beginning of the line and include any following indented + lines. Transactions start with a date a the beginning of the line and + include any indented lines following. The journal file is expected to be + encoded as ASCII or UTF-8 text. + +**Periodic Transaction**: the estimate of a transaction that would occur + periodically, e.g., a monthly expense. These estimates are only used in + budgeting and forecasting reports using the `--budget`, `--forecast`, or + `--unbudgeted` options. + [§ Budgeting and Forecasting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Budgeting-and-Forecasting) + +**Transaction Code**: an optional item in a transaction or posting often used + to record a check number or bank code. Certain custom reports can report + this code. + [§ Codes](http://www.ledger-cli.org/3.0/doc/ledger3.html#Codes); + [§ Format Expressions](http://www.ledger-cli.org/3.0/doc/ledger3.html#Format-Expressions) + +**Transaction Metadata**: a term for comments and tags annotating + a transaction. Comments indented with a transaction will be stored with + each posting of a transaction. Tags are words in comments followed by + colons. Tags can be used as filters in reports and certain tags, "Payee" or + "Value", may affect fields of the transaction. + [§ Metadata](http://www.ledger-cli.org/3.0/doc/ledger3.html#Metadata), + [§ Applying Metadata to every matched posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-every-matched-posting), + [§ Applying Metadata to the generated posting](http://www.ledger-cli.org/3.0/doc/ledger3.html#Applying-metadata-to-the-generated-posting) + +**Transaction State**: a state of *cleared*, *pending*, or *uncleared* on each + posting. The state is usually set for an entire transaction at once with + a mark after the date. The marks are ***** (cleared), **!** (pending), + or no mark (uncleared). The interpretation of this state is up to the user, + but is typically used in bank reconciliations or differentiating time worked + versus billed. Ledger supports reports and filters based on state. + [§ Transaction State](http://www.ledger-cli.org/3.0/doc/ledger3.html#Transaction-state); + [§ Cleared Report]( http://www.ledger-cli.org/3.0/doc/ledger3.html#Cleared-Report) + +**Virtual Posting**: an annotation posting in a transaction, similar in form + as a regular posting but not required to balance debits and credits. It is + often used to support + [Fund Accounting](http://en.wikipedia.org/wiki/Fund_accounting) and various + reports will collate and summarize virtual postings. Virtual postings + should not be confused with virtual posting costs. + [§ Virtual Postings](http://www.ledger-cli.org/3.0/doc/ledger3.html#Virtual-postings) + [§ Working with Multiple Funds and Accounts](http://www.ledger-cli.org/3.0/doc/ledger3.html#Working-with-multiple-funds-and-accounts) |