Beginners question, confused between real bank accounts and gnucash accounts

[Buddha Buck]

On Mon, Mar 28, 2016 at 8:46 PM Larry Evans <cppljevans at suddenlink.net>
wrote:

> It's a bit of a hassle to maintain 2 accounts (asset and
> income), for what should be 1 "entity", my investment
> accounts.  For each of these paired asset-income accounts, I
> try to make sure they have names which makes it easy to see
> the correspondence, and that's one of the hassles.
>
> However, I wondering why gnucash couldn't be redesigned so
> that an account, say for an entity named "TaxFreeBondXXX",
> be *both* an asset *and* an income account, or, for that
> matter, an expense account (to, for example, record
> commissions paid to my broker).  It seems that would make
> things easier for people like Ed and I.
>

Fundamentally, assets and income are very different things, which is why
they are tracked in different types of accounts. Assets are things you own,
incomes are increases is your net worth. Asset accounts have a
"debit-balance", meaning that debits to the account increases its balance;
while income accounts have a "credit-balance", meaning that credits to the
account increase its balance. When you receive income and put it into an
asset account (like receiving a wage check and depositing it in your bank)
you debit the asset account and credit the income account. I do not see how
that would be possible, or even what it would mean, to have an account that
is both an asset and an income account.

Looking at the situation of having a mutual fund which generates income,
the mutual fund is your asset, and the incomes change the value of that
asset. They record, when the value of the mutual fund goes up, where that
extra money comes from.

Unless I had a compelling reason to keep closer track of income/expenses
coming solely from the investment account, I would probably just have an
"investment income" account, an "investment expenses" account and record
account statements like so:

1/1/2016 Receive statement from Vanguard
Assets:Investments:VanguardIndex debit $993
Expenses:Investments:ManagementFees $debit $7
Income:Investment:Dividends credit $800
Income:Investment:CapitalGains credit $200

1/6/2016 Sell off 100 shares of APPL at $100.00/share
Assets:Checking Account: debit $9985
Expenses:BrokerageFees: debit $15
Assets:Investments:Apple credit $8043.23
Income:Investment:CapitalGains credit $1956.77


> -regards,
> Larry
>
>
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