Simplified set of types and rules for core

[epogrebnyak]

Work flow:

• A chart of accounts defines a ledger: Chart -> Ledger
• One can post entries to ledger, invalid entries are not posted Ledger -> List[Entry] -> (Ledger, List[Entry])
• On ledger closing we close income and expense accounts, create income statement, and transfer current profit to retained earnings: Ledger -> (ClosedLedger, IncomeStatement)
• Postclose entries may distribute dividend: ClosedLedger -> List[Entry] -> ClosedLedger
• End of period account balances are saved for next period: ClosedLedger -> Balances
• End of period balances create an opening entry for start of next period Balances -> Entry
• We condense contra accounts and show balance sheet report ClosedLedger -> BalanceSheet

Obtain information about ledger:

• Trial balance reflects state of ledger Ledger -> TrialBalance
• We can calculate current profit based on state of income and expense accounts

Other:

• Chart, [Entry], IncomeStatement, BalanceSheet and Balances are serialisable

Assumptions:

• No contra accounts
• Simplistic or no cash flow statement
• One level of accounts
• One currency
• No negativity or overspending checks
• Entry can touch any accounts
• Must supply entries, not transactions

Chart:

• required accounts are retained earnings account and income summary account
• Asset, Expense, Capital, Liability, Income, IncomeSummaryAccount, RetainedEarnings

[epogrebnyak]

from playground.ui import Book

# Start company
book = Book(company_name="Pied Piper")

# Create chart of accounts
book.add_assets("cash", "inventory", "ar")
book.add_capital("equity")
book.add_income("sales", offsets=["refunds"])
book.add_expense("cogs")
book.add_liability("dividend")
book.set_retained_earnings("re")

# Open ledger and post entries
book.open()
book.entry("Shareholder investment").amount(300).debit("cash").credit("equity").commit()
book.entry("Bought inventory").amount(200).debit("inventory").credit("cash").commit()
book.entry("Invoiced sales").debit("ar", 380).debit("refunds", 20).credit("sales", 400).commit()
book.entry("Shippled goods").amount(200).debit("cogs").credit("inventory").commit()

# Close ledger at period end and make post-close entries
book.close()
book.entry("Accrue dividend").amount(90).debit("re").credit("dividend").commit()

# Show reports
print(book.balance_sheet.json())
print(book.income_statement.json())

Result:

{"assets": {"cash": 100, "inventory": 0, "ar": 380}, "capital": {"equity": 300, "re": 90}, "liabilities": {"dividend": 90}}
{"income": {"sales": 380}, "expenses": {"cogs": 200}}