Contents
List of Illustrations
xiii
Preface
xvii
SECTION II
INTRODUCTION AND CONTROL
1
CHAPTER 1. THE TARGET, INTRODUCTION AND OVERVIEW
3
3
1.2 The Wider Purpose
5
1.3 Overview
6
1.4 Early Financial Memories
7
1.5
Arrival of the PC
9
1.6 Microsoft Money and Excel
9
1.7 My Solution and Domestic Well-Being
10
1.8 Approach
11
CHAPTER 2. CONTROL, MANAGEMENT AND ORGANISATION
13
2.1 Introduction
13
2.2
Central Heating, Climate and Traffic
13
2.3 The Elements of Control
18
2.4 Degree, Humidity and Flow Goals & Sub-goals
19
2.5 The Control Environment
20
2.6 The Control Model
22
SECTION II DOMESTIC FINANCES
25
CHAPTER 3. FINANCES
- THE ENVIRONMENT
27
3.1 Introduction
27
3.2 Finances in General
27
3.3 Potential for Control
28
3.4 Financial Entity Goals
29
3.5 Financial Scope
30
vii
3.6 Financial Sensors
31
3.7 Targets for Financial Control
32
3.8 Models and Accounts
32
3.9 Double Entry Accounting
33
CHAPTER 4. FINANCES THE COMPONENTS
35
4.1 Introduction
35
4.2 Assets, Liabilities and Worth
35
4.3 Owners and Managers
37
4.4 Purpose and Motivation
38
4.5 Financial Change and its Effects
39
4.6 Trade, Stock, Time and Cash
40
CHAPTER 5. FINANCES THE TOOLS
41
5.1 Introduction
41
5.2 Accounts and Transactions
41
5.3 Tee Time
44
5.4 Double Entry Implications
48
5.5 The Trial Balance
49
5.6 Accounting Equations
53
5.7 Accounting for Change and Financial Results
58
5.8 The Paper Trail
60
5.8 Bookkeeping and Accounting
62
5.9 Decision Making
64
5.10 Automation
64
5.11 Formal Results
64
5.12 Trading and Profit & Loss Accounts
65
5.13 The Balance Sheet Assets & Liabilities
67
5.14 Liquidity The Cash Flow Statement
68
CHAPTER 6. DOMESTIC WELL-BEING
71
6.1 Introduction
71
6.2 The Domestic Economy
71
6.3 Domestic Responsibility
72
6.4 Growing Income and Expenditure
75
6.5 Domestic Assets
76
6.6 The Pace and Stress of Life
76
6.7 Financial Stages of Life
77
6.8 Finance and Pleasure
79
6.9 Isolate the Business
80
6.10 Domestic Well-Being The Bottom Line
80
ACCOUNTING FOR A BETTER LIFE
viii
CHAPTER 7. DOMESTIC FINANCES
85
7.1 Introduction
85
7.2 Financial Factors
85
7.3 Receipts and Expenditure
86
7.4 Receipts and Income
86
7.5 Expenditure and Expenses
90
7.6 Domestic Accounts and Transactions
91
7.7 Profit, Loss and Total Domestic Change
93
7.8 Accuracy and Cash
94
7.9 Terminology
95
CHAPTER 8. THE DOMESTIC ACCOUNTING MODEL
97
8.1 Introduction
97
8.2 The 3-way Split Basic, Discretionary and Other
97
8.3 Categorisation and Tagging
100
8.4 The Trial Balance
102
8.5 The Domestic Well-Being Statement
102
8.6 The Consolidation and Summary Sheet
104
8.7 The Domestic Balance Sheet
107
8.8 The Domestic Cash Flow Statement
109
8.9 Domestic Financial Factors
109
8.10 Optional Graphics
114
8.11 Domestic Financial Analysis
117
8.12 A Good Compromise
118
CHAPTER 9. THE AVAILABLE TOOLS
120
9.1 Introduction
120
9.2 Personal Finance Packages
120
9.3 Spreadsheets
121
9.4 Microsoft Money and Excel
122
SECTION III DOMESTIC ACCOUNTING
129
CHAPTER 10.
THE SOLUTION I DOMESTIC BOOKKEEPING
131
10.1 Introduction
131
10.2 Preparation
132
10.3 Setting up the Accounts
132
10.4 The Categories
133
10.5 The Payees
135
CONTENTS
ix
10.6 Posting the Transactions
136
10.7 Downloading
138
CHAPTER 11.
THE SOLUTION II DOMESTIC ACCOUNTING
139
11.1 Introduction
139
11.2 Reports
139
11.3 Complete the Double Entries
141
11.4 Total Domestic Change
143
11.5 The Trial Balance
143
11.6 The Optional, Consolidation Summary
144
11.7 The Domestic Well-Being Statement
144
11.8 The Domestic Balance Sheet
145
11.9 The Domestic Cash Flow Statement
146
11.10 Summary Information
146
11.11 Domestic Financial Factors
146
11.12 The New Domestic Wealth
146
11.13 Optional Graphical Displays
149
CHAPTER 12.
START-UP AND GAINING CONTROL
151
12.1 Introduction
151
12.2 A Financial Year
151
12.3 Intermediate Results
153
12.4 Study the Financial Results
153
12.5 Look for Early Warnings
157
12.6 Look for Suspicious Changes
158
12.7 Consider Targets and Changes
158
12.8 Plan the Final and Intermediate Results
159
12.9 Monitor Progress
160
12.10
You Have Control
160
CHAPTER 13.
CONTROL POSSIBILITIES
163
13.1 Introduction
163
13.2 Factor Analysis
164
13.3 Historical Records and Analysis
177
13.4 Projections
178
13.5 Planning
179
13.6 Budgets
180
13.7 Budget Monitoring and Reallocation
181
13.8 Debt Management
181
ACCOUNTING FOR A BETTER LIFE
x
SECTION IV CONCLUDING ISSUES
183
CHAPTER 14.
DOMESTIC GRID-LOCK
185
14.1 Introduction
185
14.2 The Analogy
185
14.3 Road Networks and Virtual Domestic Accounts
186
14.4 Road Users and Domestic Transactions
187
14.5 The Traffic Engineer's Dream
187
14.6 The Road User's Dream
188
14.7 The Domestic Householder's Dream
188
14.8 Comparing the Domains
189
14.9 Control Zones and Weekend Driving
189
CHAPTER 15.
THE WAY-AHEAD
191
15.1 Introduction
191
15.2 Evaluating Alternatives
191
15.3 Comparing Domestic Well-Being
192
15.4 Simulation and Calibration
193
15.5 Informative Graphs
193
15.6 Domestic Accounting as a Discipline
194
15.7 Awareness and Education
195
15.8 New Focus for Domestic Accounting
195
15.9 Product Improvements A Wish List
196
15.10
Final Comments
197
ANNEXES
199
ANNEX A.
DEBT, CREDIT AND DOUBLE ENTRY
201
ANNEX B.
ALGEBRA AND ACCOUNTING EQUATIONS
211
B.1 Introduction
211
B.2 Equations
211
B.3 Accounting Equations
215
ANNEX C.
DOMESTIC WELL-BEING CATEGORIES
219
C.1 The Basic Category
219
C.2 The Discretionary Category
221
C.3 The Others Category
224
C.4 Total Domestic Change (TDC)
227
CONTENTS
xi
ANNEX D.
CATEGORISATION TAGGING
229
D.1 Categorisation an Introduction
229
ANNEX E.
SETTING UP THE DOMESTIC ACCOUNTS
237
ANNEX F.
THE DOMESTIC ACCOUNTING CATEGORY TAGS
249
ANNEX G.
POSTING THE TRANSACTIONS
263
G.1 Introduction
263
G.2 No Contribution to Domestic Change
264
G.3 Contributions to Domestic Change
274
G.4 Transfer Transactions
280
G.5 End-of-Period Transactions
282
G.6 Recurring Transactions and Bills
301
G.7 On-Line Bookkeeping
304
G.8 Sale and Purchase of a House
311
G.9 Currency Transfers
320
G.10 Summary
323
ANNEX H.
REPORTS
327
H.1 Microsoft Money Reports
327
H.2 Categorised Increases and Decreases
328
H.3 Trial Balance Report
333
H.4 Excel Reports
333
H.5 Consolidated Summaries
333
H.6 Domestic Well-Being Statement
336
H.7 Preparing a Chart in Excel
341
ANNEX I.
BUDGETS
345
ANNEX J.
CONSOLIDATION SUMMARY SPREADSHEETS
351
ACCOUNTING FOR A BETTER LIFE
xii