Hi Boniforti,
I received this explanation for basic accounting, which helped me a lot
with understanding how to do the 'maths' for the various accounts within
gnucash. I found it very useful, I hope you do as well;
<paste>
Debit/Credit is just Left/Right. Maybe this will help...
The Accounting Equation: Assets - Liabilities = Equity
(let's make all terms 'positive')
Assets = Liabilities + Equity
(now, we'll split off a subset of Equity)
Assets = Liabilities + Equity + Retained Earnings
(now, we'll substitute temporary accounts for Retained Earnings)
Assets = Liabilities + Equity + (Income - Expenses)
(now, we'll once again, make all terms 'positive')
Assets + Expenses = Liabilities + Equity + Income
And there, you have the full Accounting Equation with the five major
account types that GnuCash uses.
In double-entry accounting, ALL transactions are in the form of: Debit =
Credit Left = Right
The 'Debit' accounts (those that are normally (positive) a Debit
balance, and increase with a Debit, decrease with a Credit) are on the
left of the equation: Assets Expenses
The 'Credit' accounts (those that are normally (positive) a Credit
balance, and increase with a Credit, decrease with a Debit) are those on
the right of the equation: Liabilities Equity Income
A negative balance in any account would indicate either an entry error
or a contra-balance situation. (rare for individuals)
You can move funds from the left to the right, or vice versa, or between
any accounts or types on the same side of the equation. (I will use the
abbreviations Dr. and Cr. here) Most texts will write transactions Debit
first, then Credit as shown below. The amounts are not shown, because
they must be equal.
Example Left to Right - Asset to Liability (paying down a debt)
Dr. Liabilities:Loan
Cr. Assets:Cash
result: decreased Loan owed, decreased Cash on hand, Assets
decreased, Liabilities decreased - equation still in balance
Example Right to Left - Income to Asset (receipt of income)
Dr. Assets:Cash
Cr. Income:Salary
result: increased Cash on hand, increased Salary earned, Assets
increased, Income increased - equation still in balance
Example Left to Left(same type) - Asset to Asset (buying land outright)
Dr. Assets:Land
Cr. Assets:Cash
result: increased Land owned, decreased Cash on hand, Assets
shifted - equation still in balance
Example Left to Left(different type) - Asset to Expense (buying groceries)
Dr. Expenses:Food
Cr. Assets:Cash
result: increased Food expense, decreased Cash on hand, Expenses
increased, Assets decreased - equation still in balance
Example Right to Right(same type) - Liability to Liability (paying down
a loan with a credit card)
Dr. Liabilities:Loan
Cr. Liabilities:Credit Card
result: decreased Loan owed, increased Credit Card owed,
Liabilities shifted - equation still in balance
Example Right to Right(different type) - Equity to Liability
(recognition of dividends to be paid - business transaction)
Dr. Equity:Retained Earnings
Cr. Liabilities:Dividends Payable
result: decreased Retained Earnings, increased Dividends owed to
shareholders, Equity decreased, Liability increased - equation remains
in balance.
*it is rare and unusualy for an individual to shift Equity to
Liabilities and vice versa. Forgiveness of Debt may in some
jurisdictions be a transfer from Liabilities to Income.
Original Post
https://lists.gnucash.org/pipermail/gnucash-user/2023-October/109219.html
Accounting Basics
https://www.gnucash.org/docs/v5/C/gnucash-guide/basics-accounting1.html
~mark petryk
~w:http://www.lorimarksolutions.com
On 9/3/24 15:22, Boniforti Flavio wrote:
Thank you Robert.
I was going through this as I was trying to understand and your explanation
nails it: an income account is not a real account like my bank account
indeed!
F.
https://www.instagram.com/boniforti_music
https://soundcloud.com/boniforti_music
https://bonny-j.bandcamp.com
Am Di., 3. Sept. 2024 um 22:20 Uhr schrieb Robert Heller <
hel...@deepsoft.com>:
Certain types of accounts (like income) are handled "negatively": They
increase as money is "removed". That is money is moved from "income"
(gifts,
salary) to an "asset" (checking account). Both accounts show an increase
(positive) ammount. This might seem strange, but should make sense, once
you
think about it. Generally income accounts are not "real" accounts, the
way a checking account is. The actual "money" is in the checking account.
The
income acconts are accounting records of where the money in the checking
account came from.
At Tue, 3 Sep 2024 21:54:58 +0200 Boniforti Flavio <bonifort...@gmail.com>
wrote:
Hi David and thanks for your reply.
As I'm really a newbie, please excuse my struggle in getting "debit" and
"credit" right with regards to the various accounts :-(
So for a gift I received, let me see if I got it right:
100 as "deposit" on my checking account;
100 as "income" on my "gifts received".
For salary:
5000 as "deposit" on my checking account;
5000 as "income" on my salary account.
Thanks,
F.
https://www.instagram.com/boniforti_music
https://soundcloud.com/boniforti_music
https://bonny-j.bandcamp.com
Am Di., 3. Sept. 2024 um 21:21 Uhr schrieb David Warren <
da...@warren1.net>:
Hi. EVERY Gnucash entry is DOUBLE ENTRY.
But you've answered your own question.
Debit Assets:Current Assets:Checking Account for $100
Credit the income account of your choice but Income:Gifts Received is
exactly what I would use too!
For Salary, Debit Checking Account, Credit Income:Salary Received.
On Tue, Sep 3, 2024 at 2:22 PM Boniforti Flavio <
bonifort...@gmail.com>
wrote:
Hi all.
I've received 100 bucks from a relative as a gift, which he sent to
me via
bank wire transfer.
In my GnuCash accounts I do have one called "Income:Gifts Received"
and I
also of course have the "Assets:Current Assets:Checking Account",
where
the
money from the gift finally landed.
How should I proceed to register this gift I received? I don't see any
reason to do a "double-entry", because the money is not coming from
one of
my accounts - it's just getting INTO one of my accounts from
external...
Same question for my salary, of course.
Thanks for your help,
F.
https://www.instagram.com/boniforti_music
https://soundcloud.com/boniforti_music
https://bonny-j.bandcamp.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.
--
Robert Heller -- Cell: 413-658-7953 GV: 978-633-5364
Deepwoods Software -- Custom Software Services
http://www.deepsoft.com/ -- Linux Administration Services
hel...@deepsoft.com -- Webhosting Services
_______________________________________________
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.
