The Equity account is (generally) only used for opening balances before
you start accounting. Once you get going, any account opening would
necessarily have a counter/balance account. For example, if you open a
Car Loan, the counter-account would be the Car (Asset), and possibly some
Tax & Fee Expense account(s).
No, well not exactly.
a) The only reason it might seem so for individuals and sole
proprietorships is that most of us are not doing a periodic "close the
book" nor do many of us have "journal" transactions (adjustments). It is
only because software like gnucash can give us reports WITHOUT actually
closing that we usually don't have equity transaction.
b) Partnerships, corporations, etc. would have MANY equity transactions.
These weren't needed when just ONE owner (of the equity) but when split
among many, have to account for that, how much of equity to each.
But you will probably want an example of a "journal entry" transaction.
You bought your house a few years ago, but until now, never got around
to clearing all of the junk out of the attic. Among that junk you find a
couple of paintings, and gee, William Woodard. So not a fortune, but you
are probably going to want to add an asset category "art" and put these
there at a reasonable estimate of what they might go for (and don't
forget to contact your property insurance carrier.
Now this "find" is NOT income. The pictures became your property when
you bought the house and they had been left there (and so included). The
transaction where you enter their asset estimated value would have
equity as the other side.
Michael D Novack
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