[GNC] Equity Account "problem"

[Default User]

On Tue, 2023-07-11 at 16:05 -0700, Stan Brown wrote:
> 
> 
> Stan Brown
> Tehachapi, CA, USA
> https://BrownMath.com
> 
> On 2023-07-11 15:48, Default User wrote:
> > Is there a way to have Gnucash 4.13 (Debian GNU/Linux 12 Bookworm)
> > automatically calculate, and update "Equity" in the main accounts
> > tab,
> > to show the "real" value of total Equity, after any action (or at
> > least
> > transaction) that would affect "real" equity?  
> 
> Not in Accounts -- Equity accounts get updated only if you enter
> transactions to do that, or if you close the books.
> 
> But see below for a different approach that will give you what you
> want.
> 
> > But now, enter a transaction such as Expenses:Auto:Fuel (increase
> > by
> > $5.00), paid by transfer from Assets:Cash in Wallet (decrease by
> > $5.00). 
> > 
> > So now: 
> > Assets = $5.00 
> > Liabilities = $0.00 
> > Equity = $10.00
> > 
> > So . . .  if Assets - Liabilities = Equity, then 
> 
> Not quite.
> 
> Assets - Liabilities = Equity + (Income - Expenses)
> 
> In your example, $5 - $0 = $10 + ($0 - $5)
> 
> It's not instantaneous, but an easy way to get very close to what you
> want is to run a balance sheet report. That shows assets,
> liabilities,
> and equity, but a generated item "Retained Earnings" under equity
> that
> equals total income minus total expenses. This gives you the sort of
> balance you're looking for.
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Hi, Stan!

I forgot that you did mention ' a generated item "Retained Earnings"
under equity that equals total income minus total expenses'.  I will
have to check out Retained Earnings.  Is that "generated item"
something that is generated automatically or manually? But either way,
if that has to be constantly updated manually, then that also does not
seem like it would be a viable solution. But thanks for the suggestion.

Addendum: in my previous reply, I noted the "jarring" effect of how the
reports are presented.  Please let me add that in addition to the use
of black text, blue text, and even red text adds to the jarring effect,
especially having it display against a blaring, bright white
background.  Quite a contrast to the more soothing muted gold and green
against a gray background presented by the individual ledger tabs! 

Also, I acknowledge that someone might say, "You seem to be obsessed
with the concept of Equity".  Well . . .  YES, I AM!

To me Equity (Net Worth) is heart and soul of virtually every economic
activity.  It is what everything else leads up to.  As the saying goes,
"The bottom line IS the bottom line!"  Equity (Net Worth) IS the bottom
line.  It is what every economic entity lives for, hopes for, works,
eats, sleeps, breathes, and dreams for.  Compared to Equity (Net
Worth), perhaps nothing else really matters.

Yes, I think Equity is that important.  And I would hope that it would
be treated as such in accounting.  

But, maybe that's just me . . . 

Finally, I made an error. I said: " . . . the only way to get the
"real" equity at any arbitrarily chosen moment in time is to use the
built-in Income Statement report."  I meant to say: " . . . the only
way to get the "real" equity at any arbitrarily chosen moment in time
is to use the built-in Balance Sheet report."  I apologize for the
error. 

Thank you for your consideration!