> "Issue One: I don't include ASSET or LIABILITY
> accounts in the budget report even if there is a > budget value for them. It
> would be easy
> enough to add them in to the report but I
> couldn't figure out how to
> deal with them in the TOTALs section. Do I >subtract them from the
> income? Do I add the ASSETS and subtract the
> LIABILITIES?
The fundamental equation in accounting is:
Assets = Liabilities + Owners Equity
This equation only involves the balance sheet, and all changes on the P&L
should flow from what happens on the balance sheet. There is no one simple
answer that can be plugged in (as you suggest above) if you want to add assets
and liabilities to your report.
e.g., based on the changes to P&L account values (from beginning of report
period to end), you would change the assets/liabilities values in different
ways depending on the underlying transaction:
Paying a budgeted expense would decrease (credit) the bank account, while
increase (debit) the expense account;
Entering an extra bill would increase (credit) the accrued expenses balance
sheet account, while increase (debit) the expense account.
It is helpful to catgorize in your mind accounts as a debit account if debiting
it makes it bigger (eg bank account), or a credit account if crediting it makes
it bigger (eg liability account).
Hope this helps rather than make things more confusing!
Brett.
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