[Features for gnucash-1.6?]]

[Carol Champagne]

rob@myinternetplace.net wrote:

> 
> Can I just _create_ $$$ in the source account?  Since checking (or
> savings, or misc. income) is an asset, I must credit it to make it
> bigger, right?  Hrrmmm...  What is the magic formula again?  Assets =
> Owner's Equity + Libilities ???  
> 
> So as an asset gets bigger, I gotta make OE bigger, too, right?  Do I
> have a 'salary OE' account, which I credit (but since it is on that
> side of the "=", i debit it to make it bigger, no?)  So I must debit
> the 'salary OE' account, then, to show that I made $$$.
> 
> Is that close?
You always credit source accounts and debit destination accounts.  So in 
this case you credit the income account (salary) and debit the checking
account.  You are making both accounts bigger with this transaction.

The formula Assets = Liabilities + OE is correct, but this only 
describes the balance sheet accounts.  You also have income and expense
accounts, and in this case "Salary" is an income account, not OE 
account.  Income and expenses are related to OE like this:

Income - expenses = equity.  At the end of the period, when businesses
close books, they zero out the income and expense accounts and transfer
their balances to equity.  So the total formula is:
Assets = Liabilities + OE + Income - Expenses

Assets and expense accounts behave alike--debits increase them and 
credits decrease them.  Liabilities, equity and income accounts
behave alike---credits increase them and debits decrease them.

 
>  > For every expenditure, you record the _source_ (checking, savings,
>  > petty cash, etc.) and the _destination_ (i.e., account) of the
>  > recipient (groceries, mortgage, sports equipment, etc.). You
>  > probably already do this on your manual bookkeeping, but you do it
>  > either mentally ("I know that this payee represents an insurance
>  > expense") or in the memo field of the check.  Double-entry
>  > bookkeeping means only that you are forced to do the same
>  > source-destination recording for every transaction.
> 
> That's cool.  I think that I understand it some more now that I
> remember that the whole magic formula thing exists.  I wish I could
> remember which accounts go on which side of the magic formula, and
> whether you credit or debit which ones at which times.

Don't worry about credit/debit.  You don't have to use those terms to
use GnuCash.   Just make sure you're transferring money from one
account to another. Put the amount in the column that makes sense and 
enter the transfer account---GnuCash will get the math right.  For 
example, if you are depositing a paycheck in the checking account, enter 
Salary as the transfer account and put the amount under "Deposit."    If 
you jump to the Salary account, you should see an equal amount of money 
in the "Income" column.

Hope this helps...

Carol

 
> rob
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