Stardew Valley has roguelike aspects, dating simulator aspects, and farming simulator aspects. The farming simulator aspect can be used as an example to think about double-entry bookkeeping. Please note that I am NOT competent at accounting. I am using this blog writing process to learn accounting.
In Stardew Valley, extremely simplified, you can:
- harvest ripe plants, yielding one ripe vegetable each
- sell ripe vegetables for 7G (actually parsnips are 35G, but I’m simplifying)
- buy a vegetable seed for 4G (actually 20G, again simplifying)
- plant a vegetable seed
- sleep, which causes the day to advance and plants to grow one stage
Let’s imagine that there are only three stages of plants: planted, growing, and ripe. (In fact, every Stardew Valley plant grows slower than that; Parsnips are one of the fastest growing, taking 4 days).
One way you might apply accounting principles to this simple business is with a chart of accounts and a set of example journal entries. Here is a chart of accounts and a set of journal entries, denominated in G.
Gold Seeds (valued at 4G each) Planted (valued at 4G each) Growing (valued at 4G each) Ripe (valued at 4G each) Vegetables (valued at 4G each) Profit
1/1 harvest 6 plants Vegetables 24 Ripe
2/2 sell 6 vegetables Gold 42 Vegetables 24 Profit
3/3 buy 10 seeds at 4G each Seeds 40 Gold
4/4 plant 10 seeds Planted 40 Seeds
5/5 sleep Growing 40 Ripe 40 Planted 40 Growing
The last journal entry “sleep” is special in that instead of finding the numbers from the event, we are finding the numbers from the balances of the Planted and Growing accounts. I think that is characteristic of an “adjusting entry”.
If you have something that you want to buy (a new sword, a stable so you can ride around), but you don’t want to impact your income from farming, then you can use the Profit account to limit your purchases, so you don’t cut into your seed stock. If you limit your seed purchases to not cut into the Profit account, then as you push your working capital around and around this “over unity engine”, you will steadily accumulate more and more in your Gold and Profit accounts.
This is the function of the accounting system. If you simply use the world as your accounting system, then (if the world is as growth-oriented and forgiving as Stardew Valley), as you push your working capital around and around, it will inevitably grow. However, it will sometimes be tied up in vast fields, and other times it may be a pile of gold burning a hole in you pocket. Do you really want to buy a 100,000G house expansion, immediately when you have 100,450G in your pocket? Or do you want to keep some of that back, in order to have enough to buy more seeds, to keep your income up?
If you are incautious and/or unlucky when fighting in the Mines, you can be knocked out, and lose a fraction of your gold. It is not entirely obvious what the formula is, but it seems to be roughly proportional to the amount of gold you are carrying.
Suppose, instead of gold, you want to hold your wealth in the form of vegetables. These Stardew Valley vegetables are not perishable, you may want them to answer a villager’s request, and they can be used in your Grange display. Moreover, if you keep them in a chest rather than in your inventory, you can go fight in the Mines without risking them. They are a less risky asset than gold.
What accounting system and policy would lead to the number of your vegetables growing smoothly? Well, it’s straightforward to switch to denominate in vegetables and to switch to recognizing revenue at harvest
Gold (valued at 1/7V each) Seeds (valued at 4/7V each) Planted (valued at 4/7V each) Growing (valued at 4/7V each) Ripe (valued at 4/7G each) Vegetables Profit
1/1 harvest 6 plants Vegetables 42/7 Ripe 24/7 Profit
2/2 sell 6 vegetables at 7G each Gold 42/7 Vegetables
3/3 buy 10 seeds at 4G each Seeds 40/7 Gold
4/4 plant 10 seeds Planted 40/7 Seeds
5/5 sleep Growing 40/7 Ripe 40/7 Planted 40/7 Growing
The policy here is analogous: keep a constant amount of your vegetable wealth circulating through the over-unity engine, and you will be able to draw off a steady profit of vegetables. (Aside: I imagine a real accountant saying that the conversion of units wasn’t important, and changing the recognition of revenue point is the substantive change, and if I had denominated everything in gold then I wouldn’t have these awkward “over seven” fractions everywhere. For me, breaking out of the idea that the unit of account is “money” is connected to breaking out of the idea that the verb that the game calls “selling” is where recognition of revenue occurs.)
I believe that there is another idea that I don’t completely understand, that accountants sometimes use to decide where the growth goes. The idea is to flip the accounts, from tracking, say, gold, to tracking instead lack of gold. This is analogous to what physicists do, when they model a nearly-uniform gas of many electrons, with a few gaps in it, as instead a few positively charged particles - that is, the gaps.
Naturally, if you have no vegetables, then you cannot sell vegetables. By doing bookkeeping in these flipped accounts, you might be able to exploit that to focus your attention on the transactions that fulfill your goals.
So you set a goal, say for some reason you want to grow to have 1000G and 500V. You put that goal on your balance sheet. Then you flip some accounts, basically tracking where you are relative to that goal. So instead of having 499 vegetables, you say you have 1 vegetablehole, or instead of 950 gold you say you have 50 goldholes
To emphasize goal-setting, let’s pick our own currency, the U.
Goal Seeds (at 12U each) Planted (at 12U each) Growing (at 12U each) Ripe (at 12U each) Goldholes (at 3U each) Vegetableholes (at 4U each) Profit (in U) Expenses (in U)
1/1 sell 6 vegetables at 7G each Vegetableholes 42 Profit 84 Goldholes 126
2/2 buy 10 seeds at 4G each Seeds 120 Goldholes 120 Expenses
3/3 plant 10 seeds Planted 120 Seeds
4/4 sleep Growing 120 Ripe 120 Planted 120 Growing
5/5 harvest 6 plants Profit 96 Vegetableholes 24 Ripe 72
I don’t know that I’ve convicingly argued that this inversion helps, but I think it might.