Comprehensive tutorial on double-entry personal finance?

Question

Can anyone recommend a comprehensive tutorial on using double-entry accounting to manage personal finances? I've read a few articles that make double-entry seem worth learning, but I'm struggling with thinking about my finances from the double-entry mindset, and with knowing how to handle various situations.

Answer 1

The simplest way to explain double-entry accounting is from a QuickBooks Online perspective.

Small business owners use QuickBooks Online because of it's simplicity and ability to do double-entry accounting.

1. You are a business owner that purchases wholesale bird cages and sell them for retail prices
2. You setup the product inventory that you purchase and sell to your customers in QuickBooks
3. The purchase cost of the bird cage is "mapped" to a COGS (cost of goods sold account) Expense account
4. The income from selling the bird cage at the retail price is "mapped" to an Income account
5. The inventory on-hand is "mapped" to an Inventory Asset account
6. When you purchase a bird cage, one side goes to either the bank (cash) or Accounts Payable and the other side goes to the Inventory Asset Account
7. When you sell the bird cage, one side goes to either Income or Accounts Receivable and the other side goes to COGS (cost of good sold) account
8. The purchase increases the Inventory Asset account and the Sale decreases it, this is how your on-hand inventory is tracked. It all starts with setting up the items you purchase and sell to your customers. The next step is to include the item on your purchase and sales forms.

These are double entry examples.