When entering data in
GnuCash, you should be aware of the 3 levels of organization in which
divides your data: files, accounts and transactions. These levels are presented in their order
of complexity, one file contains many accounts and one account contains many transactions.
This division is fundamental to understanding how to use
GnuCash stores information at the highest level in files. A file can be stored on your computer either
as a single XML file (in all versions of
GnuCash), or in a
SQL database (in
GnuCash version 2.4 and higher).
SQL is pronounced “sequel”, so in spoken and written language we would say “a SQL database”.
With the XML file format,
GnuCash stores your data in an XML
data file, usually in compressed format (although this can be changed in the
General tab of the
With SQL storage,
GnuCash stores your data in a SQL database
under the database application you select (SQLite3, MySQL or PostgreSQL).
You will need one main file or database for each set of accounts you are maintaining. To learn how
to create and manage
GnuCash files, see Section 2.4, “Storing your financial data”.
If you think you might need more than one set of accounts, you might want to consult a professional accountant or bookkeeper before proceeding. Most users will probably have only one data file.
Backup files and log files are automatically generated by
GnuCash when appropriate. Backup and log
files are described in Section 2.5, “Backing Up and Recovering Data”.
An account keeps track of what you own, owe, spend
or receive. Each
GnuCash file can contain any number of accounts, and each account can contain
many sub-accounts up to an arbitrary number of levels. This simple feature gives
of its power in managing your finances, as you will see in later chapters.
Examples of accounts include: checking accounts, savings accounts, credit card accounts, mortgages,
and loans. Each
GnuCash account tracks the activity for that “real” account, and
can inform you of its status.
In addition, accounts are also used to categorize the money you receive or spend. For example, you can create expense accounts to track the money you pay on utilities or groceries. Even though these are not accounts that receive statements, they allow you to determine how much money is being spent in each of these areas.
Accounts will be covered in more detail in Section 2.8, “Accounts”.
A transaction represents the movement of money among accounts. Whenever you spend or receive money, or transfer money between accounts, that is a transaction.
Examples of transactions are: paying a phone bill, transferring money from savings to checking, buying a pizza, withdrawing money, and depositing a paycheck. Section 2.9, “Transactions” goes more in depth on how to enter transactions.
In double entry accounting, transactions always
involve at least two accounts–a source account and a destination account.
manages this by inserting a line into the transaction for every account that is affected,
and recording the amounts involved in each line. A line within a transaction that records
the account and amount of money involved is called a split. A
transaction can contain an arbitrary number of splits.
Splits in transactions will be covered in Section 126.96.36.199, “Split Transaction Example”