Some articles on that site have already mentioned the new ideas behind Domestic Well-Being Accounting. This article is based on information found in the book Accounting for a Better Life. It summarizes the reasoning, ideas, and concepts.
Accounts
A basic account is simply a listing of transactions relating to financial activity. The most popular form of account is the bank statement. Customers receive it from their bank every few months.
Accounts are used to accumulate value information. This is what you should know. Many people think that bank and credit card accounts only concern currency. Accounts can also be used to store transaction information related to investments, home, and car.
In most accounts, there will be two columns. You will find one column to indicate increasing (+) or decreasing (-).
It is important to understand that there can be two types of account in our books and accounts. The first type is an asset account and the second is a liabilities.
As the name suggests, an asset account stores transactions on assets like banks accounts, houses and cars. Positive amounts placed in the + columns of an asset account signify an increased value. PS500 would be an example of an increase in value. For example, PS500 placed in the + columns of asset accounts would mean that there was PS500 more. Working accounts are for at-home accounting. These accounts can be used for any account that is not specific to an asset, such as a vehicle or a house. These accounts are available for asset acquisitions and depreciation.
Another type of account is the liability one. This account is used for accumulating liabilities and/or borrowing. It is the opposite. An increase in amounts, e.g. PS300 in the + column indicates greater debt or more liability. While a decrease of PS200 is indicative of less debt, It might seem that less debt means more, but it all depends on what the liability account is used for. While accountants use the account of liability primarily to track true amounts of debt, they might also need other accounts of liability for specific transactions. These accounts are also known as working accounts in accounting. They do not directly relate to any debts. These accounts can be used to temporarily store information about asset acquisitions and the growth in a home’s value.