The foundation of accounting, double-entry bookkeeping, is often introduced to students in an imprecise, pedagogical manner, intended to ease the learner in into the topic by means of analogies, etc. But actually it's much easier to understand if it's presented as it truly is: a set of definitions can then be shown to satisfy some simple mathematical identities. Once I discovered this in 2007, it was an incredibly intellectually satisfying moment and has served me very well in understanding financial statements over the years. So forget the thick textbook and just read the below.
A succinct and mathematically precise summary of bookkeeping—alla Veneziana, "in the Venetian manner", i.e. double-entry bookkeeping
- Financial statements are a set of three documents which summarize an economic entity’s activities. They can be constructed entirely from just two sources: (1) a “chart of accounts” and (2) a list of “transactions”.
- A chart of accounts is just a list of names each of which is called an "account", each of which is assigned one of five categories: Asset, Liability, Equity, Revenue, and Expense.
- Three special accounts always exist for every company: Cash (an Asset account), Retained Earnings (an Equity account), and Share Capital (an Equity Account).
- Each economic event (called a "transaction") at a company consists of a date, an amount, a debit account, and a credit account (i.e. two of the above accounts). (The amount is the same for the debit and the credit.)
- All accounts start at 0, and debits are (+) to Asset and Revenue accounts and (-) to all others. Credits are the opposite.
- The first transaction in every company must be a credit to Share Capital with an amount >0. Normally the debit account for this transaction is Cash.
- Debits and credits are never associated with the Retained Earnings account, but instead with the Revenue and Expense accounts. Retained earnings captures all revenue and expense transactions.
Financial Statements:
1. For a given date, the balance sheet is a list of all Asset, Liability, Equity accounts. For each account, the sum of all debits and credits for that account for transactions dated on or before the date is shown. The special account, Retained Earnings, is the cumulative sum of all transactions impacting the revenue and expense accounts up to that date.
2. For a given date range, the profit and loss statement is a list of all Revenue and Expense accounts and the sum of all credits and debits during that date range. (including both dates -> e.g. if from 1 Jan to 31 Dec, it will include all days in the calendar year) The sum of all these figures between the start and end dates is a number called the Profit.
3. For a given date range, the cash flow statement breaks down the change to the "Cash" account. To do this, we list the change in ALL balance sheet accounts (i.e. Asset, Liability, and Equity) OTHER than cash. Since on each date the balance sheet must sum to 0, this is equivalent.
Observations:
- Note that the change in the Retained Earnings account is precisely the Profit shown in the profit and loss statement.
- A cash flow statement can be thought of as a restatement of the balance sheet in terms of differences, with a focus on the CASH account. Another way to think of it is cash and retained earnings are additional categories, and there are no revenue or expense categories. So categories are C, OA, L, RE, OE. In this formulation, balance sheet shows all categories, C+OA=L+RE+OE P&L shows changes to all retained earnings accounts. CF statement shows changes to all accounts OTHER than CASH.
Is Hollywood written for children?
It seems to get harder to suspend disbelief for movies as I get older. I don't find any movie compelling anymore. In 2000-2001 they seemed like portals to other worlds, access to a reality I didn't have in Thunder Bay. Access to the wider world. But now they just seem like reflections of the worldview of a very narrow group of Hollywood writers, and collections of various filmmaking tropes, and cynical attempts to entertain for making money, like a kind of circus, rather than some kind of special information about the world that I need to know.
So all I really watch these days is just re-watching of old TV shows that I have nostalgia for.
Is this a universal phenomenon? Is it an unspoken thing that every show, even if ostensibly written for adults, is in fact watched mostly by children and teenagers? And will only be watched by adults who are watching for nostalgia reasons?
Astronaut Poop
Apollo astronauts just dumped their human waste overboard on the way to the moon. at least space junk in low earth orbit just burns up after a few years. but there is no nautral disposal process to heliocentric waste. or waste in high earth orbit. so it's a strange combination of space being so vast and huge, but also that any tiny little bit of junk or waste will endure for billions of years tucked away somewhere out there. and also that evrethting is in line of sight with everyhthin else. a very strange topology and sitaution compared to stuff and living on earth, which is the opposite in all 3 respects.
-> does the fact that it's very, very small compared with the space available, make it less "there"? intuititvely, it's hard to map to concepts on earth. for instance, if there was some poop on my ballroom floor, even if it was a small amount of poop, and the ballroom floor was very large, I would want to clean it. but the orders of magnitude are larger in the space example. so do we forget about it? maybe it's like how there are gross insects eating our eyelashes all the time, but they are so small we don't care.
*Demodex brevis* length is 0.4 mm long vs human height 2m
so 4 x 10^(-3)m vs 2 x 10^0 m, so 3 orders of magnitude.
e.g. bacteria, 2 micrometers = 2 x 10^(-6)m vs 2 x 10^0 m, so 6 orders of magnitude.
e.g. atom, 0.1 nm, or 1 x 10^(-10)m, so 10 orders of magnitude.
Bag of human feces from Apollo astronauts is perhaps 10cm diameter, vs 384,000 km, a difference of
1 x 10^(-1)m vs 3.84 x 10^8m, so 9 orders of magnitude. And if we make it heliocentric, that's 150m km, which is another 3 order of magnitude, so 12 orders.
"Reality" is a chauvinistic term
Even calling it reality is a reality-chauvinistic name for it. Calling people who don't care about "reality" solipsists is another form of chauvinism.
In fact "reality" is an inappropriate abstraction layer for most of the activities humans want to enjoy - we are forced to repeat the same activities over and over (sleep, eat, travel, exercise), there are security vulnerabilities (risk of death), infrastructure can fail, your exoself program degrades over time and cannot be rebooted (your human body is aging), etc. Over time these vulnerabilities will become inescapable (due to the asymmetric power of attack vs. defend with relativistic kill weapons and orbital mechanics) - the only defense that works will be to have millions of backups and to therefore diffuse the patterns you care about in computronium spread over tiny computers running throughout the solar system.
If we move up to the "metaverse" or to a "scape" we can avoid all of the repetitive activities and focus on what humans actually care about, which is interacting with other humans and to be stimulated in novel, intellectual, and pleasurable ways. Exploring and understanding the nature of physical laws and the universe can be done while still living most of the "human" aspect of our lives in the metaverse - THIS is the appropriate abstraction layer for human interaction. Physical reality is a place only appropriate for the semi-sentient automated infrastructure and robots maintaining all the computronium, and for scientists exploring new frontiers in reality, exploring other solar systems, deep in the ocean, etc.
But for most people, we just live in a city with other humans. We don't "explore". We just want to have a pleasant life while interacting with other humans. We can do this entirely in a simulation. And it will be much better in every way.
GPUs are closer to the brain's architecture
I've become fascinated by GPUs because I realize they are thousands of little mini-CPUS, which is an architecture that resembles the brain. I wonder how they can push this further and explicitly make a chip that has as many interconnections as possible between extremely simple processors. Like, fabricate a completely new type of CPU, it doesn't have to be fast or complex, but it should maximize BANDWIDTH between the different little cells. That's how the brain works: with 100 billion neurons, each one connected to between 1-10,000 other neurons via synapses. Estimated 1,000 trillion synapses. How can we fabricate a chip that comes close to this amount of interconnection? 3D overlaid connections? lots of little subsections that are super-duper-interconnected? it doesn't have to resemble the biological brain in anything except this general topological feature of super-interconnection. probably intelligence will arise if we can do this.
i.e. neuromorphic chip
https://johnkoetsier.com/artificial-brain-neuromorphic-chip/
So computers of the future will likely be microservices architecture housed in data centers, which will have terminal connections to traditional computers housed on smartphones and laptops. And the computer in the datacenter will actually be thousands of computers of different architectures: neuromorphic for analog neural networks, traditional von Neumann CPUs, GPUs for parallel processing, and quantum for some specialized tasks.
Imagine a "brain" with access to all of these different types of computing, and with access to huge amounts of storage, of different latencies (super-fast, and slower for lots of other stuff), and networked into the internet.