Newbie's experience with gnucash

[Bill Gribble]

On Mon, Oct 16, 2000 at 11:45:52AM -0600, Eric Schwartz wrote:
> And that's what I don't get-- with Quicken, it's a transaction that
> has the attribute "car payment" attached to it.  I just record
> having spent, say, $261.01 for my car payment, slap the label "car
> payment" on it, and bob's yer uncle.  All of a sudden, it seems I
> just created a "Car Payment" account somewhere that I neither want,
> nor care about.  All I need to know is what happened with my
> checking account.

The gnucash QIF importer tried to preserve all the information in the
Quicken file, and gnucash is set up to support and encourage
double-entry bookkeeping.  We don't use "categories" per se because
double entry gets rid of the need for them.  The combination of these
factoids is that when you use the Gnucash QIF importer, it sets things
up in a gnucash way, which means double entry.  Gnucash supports
non-double-entry accounting in general, as a degraded mode of
operation, but the QIF importer does not.  Trying to use gnucash
without double entry is not supported by the QIF importer.  Sorry.
It's just not something that a significant fraction of users are
interested in.

> But how does the money get in this "Retained Earnings" (or Opening Balances,
> if I prefer) in the first place?  It has to come from somewhere, doesn't 
> it? 

The global accounting equation is "assets == liabilities + equity".
Assets are things you have, liabilities are things you owe, and equity
is the difference between them.  In the example above, you are
increasing Assets (the bank balance), so you increase Equity to keep
the equation true.

> It seems like gnucash wants a closed system of money, where all
> there ever is is the money you start with, and that's it.

Actually, that's pretty close, except that you forgot the part that
you start with 0.  When you have a "debit" in one place, you have a
"credit" somewhere else, so the net effect is zero and the global
accounting equation, "assets == liabilities + equity", is always true.

> How do I say "Somebody just gave me money.  I never had this money
> before, but it suddenly appeared out of thin air."?

You create an Income account called "Gifts".  You transfer money from
the "Gifts" account to your bank account.  Income and Expense account
balances go in the Equity term of the accounting equation, with
appropriate sign reversal for Expenses.

> I shudder to think of the questions I'm going to have once my next
> paycheck comes in, and I try to record *that*!

It's easy.  You have an Income account called "Income from my job".
You transfer money from it to your bank account.  Done.

> Er, why?  As far as I'm concerned, it's just "money goes into (or
> out of) of my account, and I put this label on it to remind me what
> it was.  Furthermore, the QIF file I get from my bank doesn't have
> category information in it, as best I can see.

You're right; generally downloadable QIF files don't have category
information.  You may have to change the "far end" accounts on these
transactions by hand once you have set up a system of accounts for
your income and expenses.

> They're already recorded in my Checking account correctly; why do I
> need to have their inverses recorded anywhere?

It's called Accounting because you have to Account for your money,
where it goes, and where it comes from.  Due diligence in accounting
can make your job much easier when you want to do budgeting or other
cash flow analysis, tax preparation/documentation, or many other
functions.

If you have an online banking interface through a web browser, you can
just combine that with the check register in the back of your
checkbook to keep and verify the amounts going into and out of your
checking account with no frills.  If you are interested in actually
understanding where your money is going, you may find that you want a
program like gnucash that is based in accounting practice.

If you do decide that you want to start learning how to use gnucash, I
think the developers would appreciate constructive criticism about its
design and interface.

Bill Gribble