how to view total for expenses subaccount

Mike or Penny Novack stepbystepfarm at mtdata.com
Thu Oct 30 07:48:26 EDT 2008


>
> Thanks for that, but I this is exactly how I enter my transactions. My
> original problem was including the Liabilities that went somewhere in
> the Expenses account in the Cash Flow report.


This isn't related to the fact that we might be using GnuCash to 
automate the keeping of the books and producing the reports. The "cash 
flow" report is important (or income/expense report or whatever is 
showing income and expenses for a period) but it is usual to supply 
along with this  "balance sheet" reports for the start and stop dates of 
the period. It is these that would show the change in liabilities and 
assets.

Fundamentals. Assets = Liabilities + Equity
You can rearrange, so Assets - Liabilities = Equities and thus changes 
to (Assets - Liabilities) = changes to (Equity)

You can think of Equity as "net worth".

Accounts of type "Income" and "Expense" are temporary accounts used to 
categorize those changes to equity during an accounting interval. If the 
total of income is greater than the total of expenses, net worth is 
increasing, otherwise decreasing, the most famous literary definition 
being in "David Copperfield" by Dickens. But this alone doesn't show the 
position relative to CASH (current assets immediately available). That's 
why you need also produce the balance sheets. It's not just  liabilities 
you need to worry about  but possibly assets also  (some of that income 
might be increase in assets but not CURRENT assets so that while your 
net worth has increased you might have a CASH problem --- or conversely, 
your cash position might be excellent but headed toward a crash because 
liabilities increasing faster).

Michael



More information about the gnucash-user mailing list