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A General Ledger : Understanding the Ledger

What is a general ledger and why is it important? To find out read on!

What is a general ledger? A general ledger is a log of all the transactions relating to assets, liabilities, owners’ equity, revenue and expenses. It’s how a company can tell if it’s profitable or it’s taking a loss. In the US, this is the most common way to track the financials.

To understand how a general ledger works, you must understand double entry bookkeeping. So, what is double entry bookkeeping? I’m glad you asked. Imagine you have a company and your first customer paid you $1000. To record this, you add this transaction to the general ledger. Two entries made: a debit, increasing the value of your assets in your cash account and a credit, decreasing the value of the revenue (money given to you by your customer payment). Think of the cash account as an internal account, meaning an account that you track the debits (increasing in value) and credits (decreasing in value). The revenue account is an external account. Meaning you only track the credit entries. External accounts don’t impact your business. They merely tell you where the money is coming from and where it’s going.

Here is a visual of our first customers payment.

If the sum of the debit column and the sum of the credit column don’t equal each other, then there is an error in the general ledger. When both sides equal each other the books are said to be balanced. You want balanced books.

Let’s look at a slightly more complex example.

You receive two bills: water and electric, both for $50. You pay them using part of the cash in your cash account. The current balance is $1000. What entries are needed? Take your time. I’ll wait.

Four entries are added to the general ledger: two credit entries for cash and one entry for each the water and electric accounts. Notice the cash entries are for credits.

For bonus, how would we calculate the remaining balance of the cash account? Take your time. Again, I’ll wait for you.

To get the remaining balance we need to identify each cash entry.

To get the balance of the Cash account we do the same thing we did to balance the books, but this time we only look at the cash account. We take the sum of the debit column for the cash account and the sum of the Credit column for the cash account and subtract them from each other. The remaining value is the balance of the cash account.

And that folks, is the basics of a general ledger and double entry bookkeeping. I hope you see the importance of this approach. As it give you the ability to quicking see if there are errors in your books. You have high fidelity in tracking payments and revenues.

This is just the tip of the iceberg in accounting. If you’d like to dive deeper into accounting, have a look at the accounting equation: Assets = Liabilities + Owner’s Equity.

Hopefully this post has given you a basic understanding of what a general ledger is and how double-entry bookkeeping works. In the next post I’ll go into how to implement a general ledger in C#.

Questions to Ask During an Interview

When I walk out of an interview, I want to know the position’s responsibilities, I want to know the environment and I want to know what I am expected to accomplish during my first week. Most of all I want to know if the company is a fit for me. More often than not companies will hire the best among the candidate pool. This does not mean they are the best for the position. Simply they are the best in the given candidate pool. Very few companies recognize this difference. It’s your job as the interviewee to vet the company.

I have developed the following questions to ask during an interview:

What will be my first task?
Is there a project plan? How much thought has gone into this position?

**What will determine success or failure? **
If project success can’t be articulated, how can they measure success in the position?

**How do I get my tasks? **
Is an issue tracking system used?

Do you use source control?
A company without source control in 2014 is almost always a deal breaker. If a company can’t provide the most basic need of software engineers there are bound to be other issues.

Do you allow remote work?
Telecommuting is a nice perk. It affords you flexibility to do errands or have appointments during lunch.

**Describe the computer/environment I am provide. **
What type of machine is given to software engineers? Two monitors or one? Is the work area low traffic and quiet — Getting stuck in a loud high traffic area sucks.

What are the hours?
Are the hours flexible? What are the core hours?

Am I on call?
Are you expected to support production issues during off hours? Do software engineers answer customer support calls?

Automated builds and Deployments?
How evolved is the build process? Do developers manually build or is it automated?

Do you have testers?
Am I responsible for testing?

**What technologies do you use? **
There are some technologies that are no longer interesting.
SCRUM, Lean, Agile or Waterfall. Does the team do Code Reviews? What about Unit Testing?

Most forget that an interview is a two way street. You, as the interviewee, are interviewing the company and your future co-workers for a good fit in the company and in the position.

Git Cheat Sheet

Below are git commands I find myself using over and over.

clone repository

git clone https://github.com/tinymce/tinymce-dist.git

Add existing git files to remote git repo

cd /path/to/my/repo
git remote add origin https://lostinkali@bitbucket.org/lostinkali/flightstats.git
git push -u origin --all # pushes up the repo and its refs for the first time
git push -u origin --tags # pushes up any tags

Create a repository in existing folder

git init
git add .
# Adds the files in the local repository and stages them for commit
git commit -m "Initial commit"

Change current branch to master

git checkout better_branch
git merge --strategy=ours master # keep the content of this branch, but record a merge
git checkout master
git merge better_branch

Delete Branch

git branch -D bugfix

Revert to previous commit

git checkout master
git reset --hard e3f1e37
git push --force origin master
# Then to prove it (it won't print any diff)
git diff master..origin/master

adds the file to git.

git add [filename]

kills off the untracked files since the more recent commit in the log.

git clean -fd

commits the added files to git.

git commit -m "enter message here"

Remove the file git. Use -f to force the file to removed even when there are changes.

git rm file1.txt

Tagging a specific point in time.

git tag -a v1.4 -m 'my version 1.4'

Going Faster Tip #6

Use tools for other purposes than they are intended for. For example operating on large number of files can be a challenge is C#. Tools like Ant, NAnt, Rake are designed for this purpose.

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