Introduction to Plain Text Accounting (March 2020)

Plain Text Accounting is the practice of maintaining a ledger in a format that values human readability, accountant auditability, and version control. The ledger-like ecosystem enables recording of purchases and transfers and investments, versioning of ledger-files to provide an audit trail, and performing analysis to produce registers, balance sheets, profit and loss statements, track billable time and paid time off, and lots of other reports. In this presentation, you’ll learn some basic accounting principles, ledger tool usage, and why you might choose plain text accounting over Quicken, QuickBooks, Mint.com, or You Need a Budget.

Transcript

1. #plaintextaccounting plaintext accounting Double-entry accounting using the ledger ecosystem @colindean 1
2. About Me Colin Dean Software Engineer & Community Builder 2
3. #plaintextaccounting Experience with ledger 2012 - 2014 Timetracking & Cryptocurrencies 3
4. #plaintextaccounting Experience with ledger 2016 Paid Time Off 4 https://github.com/colindean/pto-tracker
5. #plaintextaccounting Experience with ledger 2017-2019 Personal and non-profit accounting 5
6. #plaintextaccounting Experience with ledger 2019-present Business and non-profit accounting Personal accounting Work time and PTO tracking 6
7. #plaintextaccounting Agenda • Why accounting? • Double-entry accounting • Why Ledger? • Ledger format and its tools • Tricks 7
8. #plaintextaccounting Why accounting? 8
9. #plaintextaccounting To know what you have 9
10. #plaintextaccounting What you can access immediately + What others owe you - What you owe others What you have 10
11. #plaintextaccounting Benefits of tracking • Know what you • have across all accounts • had at some point in the past • owe and are owed • can spend 11
12. #plaintextaccounting Legally required for most businesses 12
14. #plaintextaccounting Double-entry accounting • Terminology • Account • Debit • Credit • Transaction 14
15. #plaintextaccounting A label describing an amount of something Account (even if that amount is 0) 15
16. #plaintextaccounting Five common categories of accounts 16 (for personal finance)
17. #plaintextaccounting 17 Assets Income Liabilities Expenses Wallet Bank accounts Investments Loans credited Loans owed Mortgage Credit cards Student loans Paychecks Gifts received Interest Dividends Groceries Taxes Gifts given Donations
18. #plaintextaccounting Equity 18 For everything else, there’s Opening Balances Cashback Untrackable errors
19. #plaintextaccounting The addition of value to an account Credit 19
20. #plaintextaccounting The deduction of value from an account Debit 20
21. #plaintextaccounting A collection of credits and debits with a timestamp to describe when the transaction is effective Transaction 21
22. #plaintextaccounting One transaction Credit Debit Deduct from accounts Add to accounts 22
23. #plaintextaccounting Double-entry accounting Transaction Credit Debit 23
24. #plaintextaccounting Double-entry accounting Transaction Credit Debit Credit Debit 24
25. #plaintextaccounting Balance transactions Credit Debit 0 25
26. #plaintextaccounting Balance transactions Credit Debit 0 -100 + 100 = 0 26
27. #plaintextaccounting Balance transactions Credit Debit 0 -100 523 -252 15 -186 -538 + 538 = 0 Johnny Susie Naga Bank Wallet 27
28. #plaintextaccounting Transactions must always be balanced 28
29. #plaintextaccounting Programs 29
30. #plaintextaccounting 30
31. #plaintextaccounting 31
32. #plaintextaccounting 32 “YNAB”
33. #plaintextaccounting 33 GNUCASH NU ASH
34. #plaintextaccounting ledger 34
35. 35 https://en.wikipedia.org/wiki/Comparison_of_accounting_software
36. 36 https://en.wikipedia.org/wiki/Comparison_of_accounting_software
37. #plaintextaccounting Why ledger? 37
38. #plaintextaccounting Manual entry at first • Intimate knowledge of every transaction • Envelopes are cash only • Bank exports are card and check only 38
39. #plaintextaccounting … then automate • Use bank exports processed through ledger or ledger-autosync, etc. • Use tools for payee renaming • Consider paid tools like Plaid • Don’t forget greenback transactions 39
40. #plaintextaccounting Track everything. • USD? Commodity. • BTC? Commodity. • VSTAX? Commodity. • TSLA? Commodity. • House? Commodity. 40
41. #plaintextaccounting It’s just text. • Manual typing is worst case scenario. • No special editor required. • Give it to your accountant! 41
42. #plaintextaccounting Developer-friendly • Simple format to parse and construct • Versionable with meaningful diffs and audits • Standard developer tools for everything. • Syntax highlighting, continuous integration, etc 42
43. #plaintextaccounting Ledger format • Timestamp • Payee • Accounts with positive numbers for credit • Accounts with negative numbers for debit • Optional: comments 43
44. 44 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
45. 45 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
46. 46 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
47. 47 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
48. 48 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
49. 49 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
50. 50 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet -3.00
51. 51 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 Assets:Cash:Wallet
52. 52 2017-06-27 Commonplace Coffee ; cold brew Expenses:Restaurants:Coffee 3.00 Liabilities:CreditCards:Costco
53. 53 2017-06-27 Commonplace Coffee ; cold brew Expenses:Restaurants:Coffee 3.00 Liabilities:CreditCards:Costco
54. 54 2017-06-27 Commonplace Coffee ; cold brew Expenses:Restaurants:Coffee 3.00 Liabilities:CreditCards:Costco
55. 55 2017-06-30 Spacely Sprockets ; payday! Income:SpacelySprockets -2000.00 Assets:Cash:Bank:Checking 2000.00
56. 56 2017-07-15 Spacely Sprockets ; payday! Income:SpacelySprockets -2000.00 Assets:Cash:Bank:Checking 2000.00 2017-07-15 Transfer to Savings Assets:Cash:Bank:Checking -100.00 Assets:Cash:Bank:Savings 100.00
57. 57 2017-07-30 Spacely Sprockets ; payday with taxes Income:SpacelySprockets -2735.00 Expenses:Taxes:Federal:EIT 459.00 Expenses:Taxes:Federal:FICA 192.00 Expenses:Taxes:State:EIT 84.00 Assets:Cash:Bank:Checking 2000.00
58. 58 2017-07-30 Spacely Sprockets ; payday with taxes Income:SpacelySprockets -2735.00 Expenses:Taxes:Federal:EIT 459.00 Expenses:Taxes:Federal:FICA 192.00 Expenses:Taxes:State:EIT 84.00 Assets:Cash:Bank:Checking 2000.00
59. #plaintextaccounting Running ledger 59
60. 60 2017-06-26 Opening Balances Assets:Cash:Bank:Checking 500.00 Assets:Cash:Bank:Savings 1500.00 Liabilities:CreditCards:Costco -61.25 Equity:OpeningBalances 2017-06-27 Commonplace Coffee ; cold brew Expenses:Restaurants:Coffee 3.00 Liabilities:CreditCards:Costco
 2017-07-15 Spacely Sprockets ; payday! Income:SpacelySprockets -2000.00 Assets:Cash:Bank:Checking 2000.00 2017-07-15 Transfer to Savings Assets:Cash:Bank:Checking -100.00 Assets:Cash:Bank:Savings 100.00
61. 61 ledger -f exercise1.ledger balance 4000 Assets:Cash:Bank 2400 Checking 1600 Savings -1938.75 Equity:OpeningBalances 3 Expenses:Restaurants:Coffee -2000 Income:SpacelySprockets -64.25 Liabilities:CreditCards:Costco -------------------- 0
62. 62 ledger -f exercise1.ledger accounts Assets:Cash:Bank:Checking Assets:Cash:Bank:Savings Equity:OpeningBalances Expenses:Restaurants:Coffee Income:SpacelySprockets Liabilities:CreditCards:Costco
63. 63 ledger -f exercise1.ledger payees Commonplace Coffee Opening Balances Spacely Sprockets Transfer to Savings
64. 64 ledger -f exercise1.ledger register 17-Jun-26 Opening Balances Assets:Cash:Bank:Checking 500 500 Assets:Cash:Bank:Savings 1500 2000 Liabilities:CreditCards:Costco -61.25 1938.75 Equity:OpeningBalances -1938.75 0 17-Jun-27 Commonplace Coffee Expenses:Restaurants:Coffee 3 3 Liabilities:CreditCards:Costco -3 0 17-Jul-15 Spacely Sprockets Income:SpacelySprockets -2000 -2000 Assets:Cash:Bank:Checking 2000 0 17-Jul-15 Transfer to Savings Assets:Cash:Bank:Checking -100 -100 Assets:Cash:Bank:Savings 100 0
65. 65 ledger -f examples.ledger balance 9547.97 Assets:Cash 9550.47 Bank 6436.35 Checking 3114.12 Savings -2.5 Wallet -3318.84 Equity:OpeningBalances 744 Expenses 9 Restaurants:Coffee 735 Taxes 700 Federal 500 EIT 200 FICA 35 State:EIT -6735 Income:SpacelySprockets -238.13 Liabilities:CreditCards:Costco -------------------- 0
66. #plaintextaccounting balance and register alone aren’t that useful 66
67. #plaintextaccounting Expenses minus Income Positive means that expenses are higher than income. Cashflow 67
69. 69 ledger -f examples.ledger balance ^Income ^Expenses 744 Expenses 9 Restaurants:Coffee 735 Taxes 700 Federal 500 EIT 200 FICA 35 State:EIT -6735 Income:SpacelySprockets -------------------- -5991
70. #plaintextaccounting Assets minus Liabilities Net worth 70
72. #plaintextaccounting As of 2014, ~50% of Americans have zero net worth 72 https://www.marketplace.org/2014/04/21/wealth-poverty/about-half-america-has-zero-net-wealth
73. 73 ledger -f examples.ledger balance ^Assets ^Liabilities 9547.97 Assets:Cash 9550.47 Bank 6436.35 Checking 3114.12 Savings -2.5 Wallet -238.13 Liabilities:CreditCards:Costco -------------------- 9309.84
74. #plaintextaccounting Commodities 74
75. 75 2017-07-01 Vanguard Assets:Cash:Bank:Checking -1000 USD Assets:Investments:Vanguard:RothIRA 8.03535 VTI @ 124.45 USD 2017-07-16 Vanguard Assets:Cash:Bank:Checking Assets:Investments:Vanguard:RothIRA 0.90535 VTI @ 125.56 USD
76. 76 2017-07-01 Vanguard Assets:Cash:Bank:Checking -1000 USD Assets:Investments:Vanguard:RothIRA 8.03535 VTI @ 124.45 USD 2017-07-16 Vanguard Assets:Cash:Bank:Checking Assets:Investments:Vanguard:RothIRA 0.90535 VTI @ 125.56 USD
77. 77 P 2017/07/01 16:00:00 VTI 124.45 USD P 2017/07/03 16:00:00 VTI 125.75 USD P 2017/07/05 16:00:00 VTI 128.89 USD P 2017/07/07 16:00:00 VTI 139.66 USD P 2017/07/09 16:00:00 VTI 133.45 USD P 2017/07/11 16:00:00 VTI 128.58 USD
78. 78 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/2 0 Assets -1000 USD Cash:Bank:Checking 1000 USD Investments:Vanguard:RothIRA -------------------- 0
79. 79 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/4 10 USD Assets -1000 USD Cash:Bank:Checking 1010 USD Investments:Vanguard:RothIRA -------------------- 10 USD
80. 80 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/4 10 USD Assets -1000 USD Cash:Bank:Checking 1010 USD Investments:Vanguard:RothIRA -------------------- 10 USD
81. 81 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/6 36 USD Assets -1000 USD Cash:Bank:Checking 1036 USD Investments:Vanguard:RothIRA -------------------- 36 USD
82. 82 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/8 122 USD Assets -1000 USD Cash:Bank:Checking 1122 USD Investments:Vanguard:RothIRA -------------------- 122 USD
83. 83 ledger -f exercise2.ledger --price-db exercise2.pricedb bal -V --end 7/10 72 USD Assets -1000 USD Cash:Bank:Checking 1072 USD Investments:Vanguard:RothIRA -------------------- 72 USD
85. #plaintextaccounting Other transaction features • Virtual transactions - ledger within an account • Stock lot pricing - designate basis or lot date • Command directives - default accounts, etc. • Balance assertions - declare a balance at a date • Asset allocation - see bond/equity allocation 85
86. #plaintextaccounting Other features • Budgeting • Forecasting • Timekeeping 86
87. #plaintextaccounting Budgeting • Periodic transactions • Command line options • --budget • --add-budget • --unbudgeted 87
88. 88 ~ Monthly Expenses:Restaurants:Coffee 30.00 USD Expenses:Restaurants:Lunch 100.00 USD Expenses:Coworking 50.00 USD Expenses:Groceries 600.00 USD Expenses:Phone 100.00 USD Expenses:House:Utilities 150.00 USD Liabilities:Mortgage 600.00 USD Expenses:Movies 50.00 USD Expenses:Auto:Insurance 150.00 USD Expenses:Auto:Gasoline 120.00 USD Expenses:Taxes 3000.00 USD Expenses 200.00 USD ; all other expenses Assets
89. 89 2017-06-01 Mortgage Liabilities:Mortgage 580.00 USD Assets:Cash:Bank:Checking 2017-06-26 Commonplace Coffee Expenses:Restaurants:Coffee 3.00 USD Assets:Cash:Wallet 2017-06-26 Whole Foods Expenses:Restaurants:Lunch 15.00 USD Liabilities:CreditCards:Costco
90. 90 ledger -f exercise3.ledger --monthly register --add-budget -p "june 2017” 17-Jun-01 - 17-Jun-30 Assets 4567.00 USD 4567.00 USD Expenses -200.00 USD 4367.00 USD Expenses:Auto:Gasoline -120.00 USD 4247.00 USD Expenses:Auto:Insurance -150.00 USD 4097.00 USD Expenses:Coworking -50.00 USD 4047.00 USD Expenses:Groceries -600.00 USD 3447.00 USD Expenses:House:Utilities -150.00 USD 3297.00 USD Expenses:Movies -50.00 USD 3247.00 USD Expenses:Phone -100.00 USD 3147.00 USD Expenses:Restaurants:Coffee -27.00 USD 3120.00 USD Expenses:Restaurants:Lunch -85.00 USD 3035.00 USD Expenses:Taxes -3000.00 USD 35.00 USD Liabilit:CreditCards:Costco -15.00 USD 20.00 USD Liabilities:Mortgage -20.00 USD 0
91. #plaintextaccounting Forecasting • Constantly apply periodic transactions to see future value of accounts 91
92. 92 ledger -f exercise3.ledger --forecast "T>{\$-500.00}" register ^assets ^liabilities 17-Jun-01 Mortgage Liabilities:Mortgage 580.00 USD 580.00 USD Assets:Cash:Bank:Checking -580.00 USD 0 17-Jun-26 Commonplace Coffee Assets:Cash:Wallet -3.00 USD -3.00 USD 17-Jun-26 Whole Foods Liabilit:CreditCards:Costco -15.00 USD -18.00 USD 17-Jul-30 Spacely Sprockets Assets:Cash:Bank:Checking 2000.00 USD 1982.00 USD 18-Jan-01 Forecast transaction Assets -2300.00 USD -318.00 USD 17-Aug-01 Forecast transaction Liabilities:Mortgage 600.00 USD 282.00 USD 17-Aug-01 Forecast transaction Assets -5150.00 USD -4868.00 USD 17-Sep-01 Forecast transaction Liabilities:Mortgage 600.00 USD -4268.00 USD 17-Sep-01 Forecast transaction Assets -5150.00 USD -9418.00 USD
93. #plaintextaccounting Time Keeping 93
94. 94 i 2017/06/23 09:15:00 CodeAndSupply:Talks [Plain Text Accounting] o 2017/06/23 10:00:00 i 2017/07/09 20:15:00 CodeAndSupply:Talks [Plain Text Accounting] o 2017/07/10 00:06:48 i 2017/07/11 22:00:00 CodeAndSupply:Email [Uptime Sponsorship] o 2017/07/11 22:15:00 i 2017/07/11 22:15:00 CodeAndSupply:Talks [Plain Text Accounting] o 2017/07/12 00:06:00
95. 95 ledger -f timekeeping.ledger bal 6.71h CodeAndSupply 15.0m Email [Uptime Sponsorship] 6.46h Talks [Plain Text Accounting] -------------------- 6.71h
96. 96 ledger -f timekeeping.ledger bal —end 5/13 10.00h Away 1.00h DoctorAppt 9.00h Vacation 18.00h Billable 17.25h Development [Front end] 45.0m Meeting 7.00h Nonbillable:Training -------------------- 35.00h
97. 97 ledger -f timekeeping.ledger reg --end 5/13 17-May-09 (Billable:Meeting) 45.0m 45.0m 17-May-09 (B:Development [Front end]) 8.25h 9.00h 17-May-10 (B:Development [Front end]) 9.00h 18.00h 17-May-11 (Away:Vacation) 9.00h 27.00h 17-May-12 (Nonbillable:Training) 7.00h 34.00h 17-May-12 (Away:DoctorAppt) 1.00h 35.00h
98. #plaintextaccounting Other features • Query language - mostly regex but some others • Python integration - web-based entry and scripting 98
99. #plaintextaccounting ledger-cli.org 99 ledger-cli.org/docs.html
100. #plaintextaccounting Ecosystem 100
101. #plaintextaccounting #plaintextaccounting 101
102. #plaintextaccounting plaintextaccounting.org 102
107. 107 Treemap of my 2017 Expenses in Fava, the web UI for Beancount
109. #plaintextaccounting Treat Transactions As Code • Version it with git, etc. • Setup continuous integration to catch entry errors • Setup continuous deployment • Deploy transaction record inside a container running Fava for quick web analysis • Send summaries to Slack! 109
111. #plaintextaccounting Takeaways • Accounting informs us of how much we have. • Bookkeeping is the practice of tracking transactions. • Double-entry accounting requires balanced transactions. 111
112. #plaintextaccounting Takeaways • There are many tools. • ledger is the most well-known plain text accounting tool. • There is a whole ecosystem and community around it. 112
113. #plaintextaccounting Takeaways • Text lends itself to easier management. • Manual entry may seem tedious but it enables intimate knowledge of one’s finances. • Use the tools you know to manage your finances and build automation that works for you – and share it with the world! 113
114. #plaintextaccounting Is ledger the best? 114
116. #plaintextaccounting Use the best tool for you 116
117. #plaintextaccounting Go forth and save! 117
118. #plaintextaccounting Attributions • Rich Uncle Pennybags © Hasbro. Artist unknown. • Logos are property of respective and obvious owners. 118
119. @colindean 119
120. #plaintextaccounting plaintextaccounting.org 120 /r/plaintextaccounting @LedgerTips irc://chat.freenode.net/ledger http://j.mp/plaintextaccounting-codeandsupply-2017