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
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