On Thu, 2023-07-13 at 08:28 +1000, David Cousens wrote: > The answer is unfortunately it is both. I think Michael has already > explained > that Income and Expenses are actually temporary Equity accounts which > are kept > separate so that the profit/loss and other parameters of interest in > running a > business can be calculated over a shorter term either for management > and/or tax > calculation purposes. To get the cuurent equity at any point mid > period you > would use the balance of the Equity account + Income balance - > Expense Balances > at that date. A standard Balance Sheet report should give you the > Equity > balance and a Income/Expensereport to the same date as the balance > sheet to get > the relevant Income and Expense balances for the calculation. > > If your programming skills are up to it, you could create a > customized net worth > report . > > David Cousens > > On Wed, 2023-07-12 at 17:35 -0400, Default User wrote: > > On Wed, 2023-07-12 at 10:21 +1000, David Cousens wrote: > > > The calculation of Equity is automatic and built into double > > > entry > > > accounting > > > system. This is the purpose to a large extent of the two or more > > > entries > > > (referred to as splits in GnuCash documentation) associated with > > > a > > > single > > > transaction. Income and Expenses are Equity accounts that are > > > split > > > off from > > > equity with the primary purpose of measuring the short term loss > > > or > > > gain over a > > > specific period and you will notice if you look through the > > > examples > > > in the > > > GnuCash Help Manual and Tutorial Guide that most transactions > > > involve > > > one split > > > to an asset or liability account and another to either an Income > > > or > > > Expense > > > account except where the transaction is regarded as a capital > > > purchase which > > > will produce income over more than a single accounting period > > > (usually annually > > > but can be semi annually or monthly). > > > > > > It can be circumvented by not following the recommended > > > procedures. > > > First you > > > need to understand the double entry accounting system basics and > > > then > > > GnuCash's > > > implementation of it.There are on line resources on double entry > > > if > > > the > > > introduction in the gude and help manual is too brief for your > > > needs. > > > > > > David Cousens > > > > > > > > > On Tue, 2023-07-11 at 18:48 -0400, Default User wrote: > > > > Hi! > > > > > > > > Is there a way to have Gnucash 4.13 (Debian GNU/Linux 12 > > > > Bookworm) > > > > automatically calculate, and update "Equity" in the main > > > > accounts > > > > tab, > > > > to show the "real" value of total Equity, after any action (or > > > > at > > > > least > > > > transaction) that would affect "real" equity? > > > > > > > > Example: > > > > Start with the GnuCash "Common Accounts", as in > > > > gcashdata_1.gnucash > > > > from the Tutorial and Concepts Guide, with all accounts set to > > > > $0.00. > > > > > > > > Now make a transaction so that Equity:Opening Balances starts > > > > with > > > > $10.00, and Assets:Current Assets:Cash in Wallet starts with > > > > $10.00. > > > > At this point, Equity = $10.00. All good so far. > > > > > > > > But now, enter a transaction such as Expenses:Auto:Fuel > > > > (increase > > > > by > > > > $5.00), paid by transfer from Assets:Cash in Wallet (decrease > > > > by > > > > $5.00). > > > > > > > > So now: > > > > Assets = $5.00 > > > > Liabilities = $0.00 > > > > Equity = $10.00 > > > > > > > > So . . . if Assets - Liabilities = Equity, then > > > > $5.00 - $0.00 = $10.00? > > > > > > > > Thus, Equity does not seem to include the $5.00 Expense > > > > transaction. > > > > [Note: of course, the Balance Sheet in Reports does correctly > > > > show > > > > Equity as $5.00.] > > > > > > > > I assume that GnuCash has always been this way, from the > > > > beginning, > > > > and > > > > is not likely to change now! > > > > > > > > But is there a viable "workaround"? I am pretty sure I > > > > understand > > > > what > > > > is going on, and maybe why it was done that way (so that the > > > > account > > > > ledger tabs show legitimate transactions" only?) > > > > > > > > But it does bother my sense of "correctness". > > > > > > > > [Note: I did see somewhere online a link to a web page that may > > > > have at > > > > one time shown the desired solution, but the web page has since > > > > been > > > > 404'd.] > > > > > > > > : ( > > > > > > > > > > > > > > > > > > > > _______________________________________________ > > > > 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. > > > > > > Hi, David! > > > > Thank you for your reply. Especially the suggestion to "read up" > > on > > double-entry accounting. In that regard, I am reminded of the > > ancient > > Greek or Roman commentator who said (approximately): > > > > "Much study is a great weariness, and of writing books there is no > > end". > > > > Anyway, may I just say by way of explanation, that I think the > > fundamental basis of my frustration is that the definition of > > Equity > > seems to be inconsistent and even contradictory. > > > > It seems that one can say: > > Assets - liabilities = Equity > > > > But in the next breath, they can say: > > Assets - liabilities = Equity + (Income - Expenses) > > > > Well, which is it? Does Equity include (Income - Expenses) or not? > > > > The cognitive dissonance here is astounding! > > > > It would seem to me that the only times [Assets - liabilities = > > Equity] > > and [Assets - liabilities = Equity + (Income - Expenses)] are in > > synchronization are when Equity consists of, perhaps, only the > > opening > > balances of its component accounts, OR when the balances of Expense > > and > > Income accounts are at some specific point in time, transferred to > > Equity, in which case both definitions of Equity are true. > > > > May I suggest that such transfers are usually only done, say, every > > fiscal year (or quarter, or whatever), normally when the "books are > > closed", at the end of a designated accounting period. > > > > May I further postulate that such behavior was because > > historically, in > > an ink pen and paper world, this was a real chore, not to be done > > every > > day (let alone every hour, minute or second!). Once upon a time, > > it > > made sense. > > > > But that was then. This is now. In the modern computerized, > > networked, split-second world, Perhaps the concept of the Balance > > sheet > > being for an instant frozen in time, connected to another balance > > sheet > > , for another instant frozen in time, connected only by Income > > Statements explaining how we got from the earlier Balance Sheet to > > the > > later Balance sheet, is at best a quaint anachronism, that may no > > longer be necessary. > > > > Now, I am not saying that Income Statements are not of value. > > Indeed, > > they are of the greatest value, showing trends and the how and why > > we > > got from one arbitrarily chosen point in time to any other > > arbitrarily > > chosen point in time. > > > > So, Why NOT have Balance sheets update instantly in time with every > > transaction, so that [Assets - liabilities = Equity] ALWAYS = > > [Assets - > > liabilities = Equity + (Income - Expenses)]? It would seem to be > > more > > immediately useful, and of course, more rationally consistent. > > > > SO, why not? Well, for the sake of argument, let me suggest a few > > possible reasons: > > > > 1) Resistance to change. The movements of physical objects in > > space > > are not the only things subject to inertia. Human behavior is, of > > course, subject to inertia as well. Consider: nothing changes > > unless > > something makes it change. One form of this is known as "appeal to > > tradition. ("We've always done it this way, why change")? Also > > sometimes expressed as the (sometimes valid), "If it ain't broke, > > don't > > fix it"! > > > > 2) Vested Interests. There are people who have a vested interest > > in > > the promulgation of, and the enforcement of the promulgation of, > > the > > status quo, as do many others, further down the "food chain". To > > quote > > from the movie "The Sand Pebbles", "It's his rice cup!". > > > > 3) Desire to conform. "Everyone else is doing things a certain > > way, so > > I should, too". For many people, conformity to existing norms is > > not > > just a survival mechanism, but is so deeply inculcated that they > > may > > not even be aware of it. And pardon me for suggesting that the > > quintessential stereotype of the conformist is the accountant. (In > > evidence: the "Accountancy" skit from the comedy television show > > "Monty > > Python's Flying Circus". > > > > I didn't mean to run so long, but when I get going, I get going. > > (Remember "inertia"?) > > > > Well, that's my story, and I'm sticking to it. Comments are > > welcome, > > but No Bully, please! > > > > Have a good day! > > > > _______________________________________________ > > 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.
Hi, David! Unfortunately, I am not a programmer. So I guess I will just have to work with what is available to me. Thanks anyway! _______________________________________________ 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.
