Accounting Fundamentals Explained for Computer Scientists and Technical Professionals

Every educated person really ought to have a basic understanding of accounting. Just like maths, science, programming, music, literature, history, etc., it's one of those things which helps you make sense of the world.

Sadly, in my opinion, most accountants do a terrible job of explaining their work in an accessible way; it's a profession that seems to delight in making itself appear more complicated than it really is.

Accounting is essentially a system for tracking where money comes from and where it goes. It's a way of keeping score in business, and it's based on some very simple principles that are actually quite elegant.

The fundamental equation of accounting is: Assets = Liabilities + Equity. This equation must always balance, just like a well-designed database constraint.

Double-entry bookkeeping is essentially a distributed system for tracking financial transactions. Each transaction affects at least two accounts, and the system maintains the invariant that debits always equal credits.