Thanks -- glad to be of help! I should just save it as a file rather than rewriting it from scratch every time, because as you can probably guess, it's a frequently asked question.
Stan Brown Tehachapi, CA, USA https://BrownMath.com On 2023-02-20 14:26, Abe Sternberg wrote: > Excellent definition. I know all the theory, but translating it into > transactions isn't always easy for me. I like the way you put it. > > Thanks, > Abe > > On 2/20/2023 16:25, Stan Brown wrote: >> On 2023-02-20 12:16, Abe Sternberg wrote: >>> I understand that part. If I buy clothes, I debit (-) the checking >>> account and credit the clothes (+) account. It is when things are not >>> obvious or go to something like an equity account that I am totally >>> at sea. >> I think you mean you _credit_ the checking account (which does indeed >> reduce it) and _debit_ the clothes account (which does indeed increase >> it). Your checking account is an asset, and your clothing is an expense >> (assuming you're not the business of selling clothes). >> >> Bookkeeping should not scare you. But as with learning anything new, >> there's always a certain amount of memorization. Here it is: >> >> 1. ASSETS and EXPENSES: a debit increases them, a credit decreases them. >> 2. LIABILITIES, EQUITY, and INCOME: a debit decreases them, a credit >> increases them. >> 3. The total of all debits in the books must equal the total of all >> credits. The way you accomplish this is by ensuring that total debits >> always equal total credits in each transaction. >> 4. (implied by 1 and 3): >> ASSETS + EXPENSES = LIABILITIES + EQUITY + INCOME. >> People have their favorite versions of this equation, but any valid >> version can be transformed to any other, simply by moving one or more >> items to the opposite side of the equation and changing their sign. Thus: >> ASSETS = LIABILITIES + EQUITY + (INCOME = EXPENSE) >> ASSETS - LIABILITIES - EQUITY - INCOME + EXPENSE = 0 >> etc. >> >> Credit-card accounts and checking or savings accounts can be problematic >> until you get used to them, because the bank's vocabulary is exactly >> opposite to yours. >> >> When you make a purchase with a credit card, your account is charged >> (debited) on the bank's books, but you have increased your liability, so >> you post a credit to your credit-card account on your books. >> >> When you make a payment to your credit-card account from your checking >> account, on your books that is a debit to your credit card (reducing >> your liability) and a credit to your checking account (reducing an >> asset). On the bank's books, it's exactly opposite. >> >> My suggestion is, get BOOKKEEPING FOR DUMMIES or a similar book from the >> library and read through it, pausing as need be to work through the >> examples. (The "Dummies" label is quite insulting, but in my experience >> the books themselves have been well done.) >> >> Stan Brown >> Tehachapi, CA, USA >> https://BrownMath.com >> _______________________________________________ >> gnucash-user mailing list >> gnucash-user@gnucash.org >> To update your subscription preferences or to unsubscribe: >> https://lists.gnucash.org/mailman/listinfo/gnucash-user >> ----- >> Please remember to CC this list on all your replies. >> You can do this by using Reply-To-List or Reply-All. > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
