Summary of rationale, and technical introduction
Other articles about Domestic Well-Being Accounting (DWBA), provide insight into the new ideas underpinning this new domestic model. Based on the new book, “Accounting resources for a Better Life”, the rationale, ideas and concepts of this article can be summarized.
An account is simply a listing of transactions that are related to one financial activity. The most well-known form of account is the “bank statement”. It is usually sent by the bank to customers every now and again.
It is important that you understand that accounts are intended to accumulate information about values. People are often so focused on bank and credit card accounts, which are all about currency, but sometimes they don’t realize that accounts could also be useful in accumulating transaction data relating to homes, investments, and cars.
Accounts typically have two columns. One column is for increasing (+),, the other for decreasing (-).
The second important concept is that there are two typesof accounts that you can use within your books or setsof accounts. The first account is known as an asset while the second is called a liability.
As the name suggests, an asset bank account stores transactions for assets like houses, cars, and banks. It is believed that positive amounts can signify greater value. PS500 would signify an increase in PS500 if it was entered in the + column of an Asset Account. Accountants may also have working accounts to help with their home accounting. These accounts can be used for business purposes, even though they are not intended for an asset like a vehicle or house. These accounts can be used for asset acquisition or depreciation.
The liability account is the second overall type. It’s used to accumulate debts and/or liability. You can also see an increase in the amount, e.g. The + column of this type account’s PS300 means that there is more debt. A decrease of PS200 indicates less debt. This might make it seem that less debt equals higher value. But this depends on the purpose and function of liability accounts. Accounting professionals mostly use liability accounts to track true debt amounts. There are occasions when accounting professionals may require additional accounts to cover liability. These accounts are called working accounts in home-accounting and they don’t relate to actual debts. These accounts are temporary information, such as about the acquisition of assets or the increase in value of a home.