r19769 - gnucash-docs/trunk/guide/C - Bug #633385
Yawar Amin
yawaramin at code.gnucash.org
Sun Nov 7 00:13:05 EDT 2010
Author: yawaramin
Date: 2010-11-07 00:13:05 -0400 (Sun, 07 Nov 2010)
New Revision: 19769
Trac: http://svn.gnucash.org/trac/changeset/19769
Modified:
gnucash-docs/trunk/guide/C/ch_basics.xml
gnucash-docs/trunk/guide/C/ch_txns.xml
Log:
Bug #633385
Restructure §2.2 Data Entry Concepts to only include basic info on files,
accounts, and transactions. The old double-entry section can be effectively
replaced by §2.1.3 Double Entry, and the section showing a detailed guide
to entering a split transaction can be effectively replaced by §4.2.2 Split
Transaction.
Minor cosmetic edits to §2.1.3 and a concept clarification to §4.2.2.
Author: David (sunfish62 at yahoo dot com)
Input: Yawar Amin (yawar dot amin at gmail dot com)
Tom Bullock (tbullock at nd dot edu)
Modified: gnucash-docs/trunk/guide/C/ch_basics.xml
===================================================================
--- gnucash-docs/trunk/guide/C/ch_basics.xml 2010-11-06 21:37:16 UTC (rev 19768)
+++ gnucash-docs/trunk/guide/C/ch_basics.xml 2010-11-07 04:13:05 UTC (rev 19769)
@@ -118,17 +118,17 @@
<sect2 id="basics-accountingdouble2">
<title>Double Entry</title>
- <para>The accounting equation is the very heart of a double entry
- accounting system. For every change in value of one account in the
+ <para>The accounting equation is the very heart of a <firstterm>double entry
+ accounting system</firstterm>. For every change in value of one account in the
Accounting Equation, there must be a balancing change in another. This
- concept is known as the <emphasis>Principle of Balance</emphasis>, and
+ concept is known as the <firstterm>Principle of Balance</firstterm>, and
is of fundamental importance for understanding <application>&app;</application> and other double
entry accounting systems. When you work with <application>&app;</application>, you will always be
- concerned with at least 2 accounts, to keep the Accounting Equation
+ concerned with at least 2 accounts, to keep the accounting equation
balanced.</para>
<para>Double entry accounting serves two purposes. The first is to
- create an accounting trail, money always has to come from somewhere and
+ create an accounting trail; money always has to come from somewhere and
go to somewhere. Additionally, double entry accounting historically
served to double check the math of an accountant. Because the numbers
are entered into multiple accounts simultaneously, there are multiple
@@ -167,315 +167,97 @@
file contains many accounts and one account contains many transactions.
This division is fundamental to understanding how to use <application>&app;</application>.</para>
- <sect2 id="basics-accounts2">
- <title>Files, Accounts and Transactions</title>
+ <sect2 id="basics-files2">
+ <title>Files</title>
- <para><application>&app;</application> uses <emphasis>files</emphasis> for storing information.
- <application>&app;</application> provides three types of files: data files, backup files, and log
- files. The main file that you will use to store your data is a data
- file. You will probably have only one data file that you use for your
- home data, but <application>&app;</application> will automatically save a backup copy for you
- each time you save that data file. <application>&app;</application> also provides log files which
- can be used to help reconstruct data. Backup and log files are described
- in <xref linkend="basics-backup1" />.</para>
+ <para><application>&app;</application> stores information at the
+ highest level in files. A file can be stored on your computer either
+ as a single <acronym>XML</acronym> file (in all versions of
+ <application>&app;</application>), or in a <acronym>SQL</acronym>
+ database (in version 2.4 and higher).</para>
- <para>An <emphasis>account</emphasis> is a place for keeping track of
- what you own, owe, spend or receive. Although you only have one main
- data file, that file will contain many accounts. You probably already
- think of money you own or owe as being in an account. For example, at
- some point you opened checking and savings accounts at a particular
- bank, and that bank sends you monthly statements showing how much money
- you <emphasis>own</emphasis> in these accounts. Credit card accounts
- also send you statements showing what you <emphasis>owe</emphasis> to a
- credit card company, and the mortgage company may send you periodic
- statements showing how much you still <emphasis>owe</emphasis> on your
- loan.</para>
+ <note>
+ <para><acronym>SQL</acronym> is pronounced <quote>sequel</quote>,
+ so in spoken and written language we would say <quote>a SQL
+ database</quote>.</para>
+ </note>
- <para>In <application>&app;</application>, accounts are also used to categorize money you receive
- or spend, even though these are not physical accounts that receive
- statements. As we will cover more in <xref linkend="chapter_accts"></xref>,
- income type accounts are
- used to categorize money received (like a paycheck), and expense type
- accounts are used to categorize money spent (for pizza, to pay a bill,
- etc.) These accounts function much like categories in some other
- financial programs, with a few advantages discussed in
- <xref linkend="chapter_accts"></xref>.</para>
+ <para>With the <acronym>XML</acronym> file format,
+ <application>&app;</application> stores your data in an
+ <acronym>XML</acronym> data file, usually in compressed format
+ (although this can be changed in preferences).</para>
- <para>A <emphasis>transaction</emphasis> represents the movement of
- money from one account to another account. Whenever you spend or receive
- money, or transfer money between accounts, that is a transaction. In
- <application>&app;</application>, as we will see in the next section, transactions always involve
- at least two accounts. Examples of transactions are: paying a bill,
- transferring money from savings to checking, buying a pizza, withdrawing
- money, and depositing a paycheck. <xref linkend="chapter_txns"></xref>
- goes more in depth on how to enter transactions in <application>&app;</application>.</para>
- </sect2>
+ <para>With <acronym>SQL</acronym> storage,
+ <application>&app;</application> stores your data in a
+ <acronym>SQL</acronym> database under the database application you
+ select.</para>
- <sect2 id="basics-dbentry2">
- <title>Double Entry</title>
+ <para>You will need one main file or database for each set of
+ accounts you are maintaining. To learn how to create and manage
+ <application>&app;</application> files, see <xref
+ linkend="basics-files1"/>.</para>
- <para>You’ve probably heard the saying, <quote>Money doesn’t grow on
- trees</quote>. It means that money must come from somewhere - it doesn’t
- just <quote>appear</quote>. <emphasis>Double entry accounting
- </emphasis> is a method of record-keeping that lets you track just where
- your money comes from and where it goes. Using double entry means that
- money is never gained nor lost - an equal amount is always transferred
- from one place to another. When you withdraw cash, you are transferring
- money from your bank account to your wallet. When you write a check to
- the grocery store, you are transferring money from your checking account
- to the grocery store. And when you deposit a paycheck, you are
- transferring money from your source of income to your bank
- account.</para>
-
- <para>In <application>&app;</application>, these transfers are known as
- <emphasis>transactions</emphasis>, and each
- transaction requires at least two accounts. To enter the cash
- withdrawal, for example, you would enter a transfer of money from a bank
- account to a cash account. You would record the grocery check as a
- transfer from a checking account to a groceries expense account. And the
- paycheck deposit is recorded as a transfer from an income account to a
- bank account.</para>
-
- <para>Unlike traditional accounting packages, <application>&app;</application> makes it very easy
- to enter your double entry transactions. <xref linkend="chapter_txns"></xref>
- gives more detail on
- entering transactions, but for now let’s take a general look at how they
- work. For a basic transaction like writing a check, you first create two
- accounts: a checking account and an account for the expense. For
- example, if you write a check to pay for groceries, then you need both a
- checking account and a groceries account.
- (See <xref linkend="chapter_accts"></xref> for more detail
- on creating accounts.) To record the check, you simply enter a
- transaction to transfer money from the checking account to the groceries
- account. In this example, the <application>&app;</application> transactions look like this when
- viewed from the register windows of the checking account:</para>
-
- <screenshot id="basics-DoubleEntryIntro-compact">
- <mediaobject>
- <imageobject>
- <imagedata fileref="figures/basics_DoubleEntryIntro_compact.png"
- format="PNG" srccredit="Bengt Thuree" ></imagedata>
- </imageobject>
-
- <textobject>
- <phrase>A Basic Transaction</phrase>
- </textobject>
-
- <caption>
- <para>This image shows entering the date, description and transfer
- account for a payment of <guilabel>$50</guilabel> to the
- <guilabel>Grocery Store</guilabel>.</para>
- </caption>
- </mediaobject>
- </screenshot>
-
- <para>In this transaction, a check is written to <guilabel>Grocery
- Store</guilabel> for <guilabel>$50</guilabel>. Since this is a double
- entry transaction, at least two accounts are affected and must be part
- of the transaction. <application>&app;</application> automatically enters the current account
- name (<guilabel>Assets:Checking Account</guilabel>) for you so you only
- enter the other account name affected
- (<guilabel>Expenses:Groceries</guilabel>).</para>
-
- <para>To emphasize that <application>&app;</application> stores everything as double entry
- transactions, we change the view to <guilabel>Transaction
- Journal</guilabel> and see how it looks.</para>
-
- <screenshot id="basics-DoubleEntryIntro-expanded">
- <mediaobject>
- <imageobject>
- <imagedata fileref="figures/basics_DoubleEntryIntro_expanded.png"
- format="PNG" srccredit="Bengt Thuree" ></imagedata>
- </imageobject>
-
- <textobject>
- <phrase>Transaction Journal view of a Basic Transaction</phrase>
- </textobject>
-
- <caption>
- <para>This image shows the <guilabel>Transaction
- Journal</guilabel> of the <guilabel>Checking
- Account</guilabel></para>
- </caption>
- </mediaobject>
- </screenshot>
-
- <para>Observe that we have one entry for depositing (debiting) the <guilabel>
- Expense:Groceries</guilabel> account, and one entry for withdrawing (crediting)
- from <guilabel>Assets:Checking Account</guilabel>.</para>
-
- <para>Let’s have a quick look to see how this same transaction looks from the
- <guilabel>Expense:Groceries</guilabel> account</para>
-
- <screenshot id="basics-DoubleEntryIntro-Groceries">
- <mediaobject>
- <imageobject>
- <imagedata fileref="figures/basics_DoubleEntryIntro_groceries.png"
- format="PNG" srccredit="Bengt Thuree" ></imagedata>
- </imageobject>
-
- <textobject>
- <phrase>View of a Basic Transaction in Expenses:Groceries</phrase>
- </textobject>
-
- <caption>
- <para>This image shows the <guilabel>Transaction
- Journal</guilabel> of the <guilabel>Groceries</guilabel>
- Account</para>
- </caption>
- </mediaobject>
- </screenshot>
-
-
<note>
- <para>In this example for double entry accounting we used a checking
- account to pay for the groceries. But, notice that concept is the same
- no matter what method you use to pay for the groceries. If instead you
- used a credit card, the double entry accounting would simply involve
- your Credit Card account instead of the Checking account.</para>
+ <para>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.</para>
</note>
- <para>What about your paycheck? You can see that money goes into a bank
- account, but where does it come from? In double-entry, the money has to
- come from somewhere. Technically, that money comes from your employer,
- but you don’t care about tracking your employer’s accounts. So how do
- you account for money coming in? In <application>&app;</application>, you create a special income
- type account to track your incoming paychecks.
- (See <xref linkend="chapter_accts"></xref> for more
- information on creating income accounts.) To record the paychecks, you
- simply enter a transaction to transfer money from the income account to
- a bank account.</para>
+ <para>Backup files and log files are automatically generated by
+ <application>&app;</application> when appropriate. Backup and log
+ files are described in <xref linkend="basics-backup1"/>.</para>
+ </sect2> <!-- basics-files2 -->
+ <sect2 id="basics-accounts2">
+ <title>Accounts</title>
- <para>Here’s what a paycheck deposit looks like in <application>&app;</application>.</para>
+ <para>An <firstterm>account</firstterm> keeps track of what you own,
+ owe, spend or receive. Each <application>&app;</application> file can
+ contain any number of accounts, and each account can contain many
+ sub-accounts upto an arbitrary number of levels. This simple feature
+ gives <application>&app;</application> much of its power in managing
+ your finances, as you will see in later chapters.</para>
- <screenshot id="basics-DoubleEntryIntro-salary">
- <mediaobject>
- <imageobject>
- <imagedata fileref="figures/basics_DoubleEntryIntro_salary.png"
- format="PNG" srccredit="Bengt Thuree" ></imagedata>
- </imageobject>
+ <para>Examples of accounts include: checking accounts, savings
+ accounts, credit card accounts, mortgages, and loans. Each
+ <application>&app;</application> account tracks the activity for that
+ <quote>real</quote> account, and can inform you of its status.</para>
- <textobject>
- <phrase>A simple paycheck transaction</phrase>
- </textobject>
+ <para>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.</para>
- <caption>
- <para>This image shows entering the date, description and transfer
- account for a <guilabel>$600</guilabel> <guilabel>
- Salary</guilabel> payment from <guilabel>Employers R
- Us</guilabel>.</para>
- </caption>
- </mediaobject>
- </screenshot>
+ <para>Accounts will be covered in more detail in <xref
+ linkend="chapter_accts"/>.</para>
+ </sect2> <!-- basics-accounts2 -->
+ <sect2 id="basics-transactions2">
+ <title>Transactions</title>
- <para>In this example, <guilabel>$600</guilabel> is transferred from a
- <guilabel>Salary</guilabel> income account to the <guilabel>Checking
- Account</guilabel>. Because of the special nature of income accounts,
- discussed in <xref linkend="chapter_accts"></xref>, this transaction
- increases both the checking account balance and the income account
- balance by the amount transferred.</para>
+ <para>A <firstterm>transaction</firstterm> represents the movement of
+ money among accounts. Whenever you spend or receive money, or
+ transfer money between accounts, that is a transaction.</para>
- <para>So what if you want to record your gross pay and all the
- deductions that come out of your check as well? You enter a transaction
- with <emphasis>multiple splits</emphasis>, which we will cover in
- <xref linkend="txns-registers-multiaccount2"></xref>.
- In this type of transaction, you are transferring a sum of
- money from one location to several locations. For any double entry
- transaction, the <emphasis>total</emphasis> amount of money transferred
- <emphasis>from</emphasis> accounts must equal the
- <emphasis>total</emphasis> amount transferred <emphasis>to</emphasis>
- other accounts.</para>
+ <para>Examples of transactions are: paying a phone bill, transferring
+ money from savings to checking, buying a pizza, withdrawing money,
+ and depositing a paycheck. <xref linkend="chapter_txns"/> goes more
+ in depth on how to enter transactions.</para>
- <para>For example, your gross pay might be $1000, but only $655 of that
- gets deposited in your checking account. The remaining $345 is split
- between your deductions, such as federal taxes, FICA and state taxes.
- How do you account for this in <application>&app;</application>? First, you should have accounts
- set up for the gross income (salary), checking, and each of the
- deductions (See <xref linkend="chapter_accts"></xref>).
- Then you enter a transaction to transfer
- $1000 from the <guilabel>Salary</guilabel> account to the other
- accounts: <guilabel>Checking Account</guilabel>,
- <guilabel>Federal</guilabel>, <guilabel>Medicare</guilabel>,
- <guilabel>Social Security</guilabel> and
- <guilabel>State/Province</guilabel>. Because this is a double entry
- transaction, the total amount transferred to these five accounts must
- equal the original $1000 total coming from the income account. We cover
- this type of transaction in more detail in
- <xref linkend="chapter_txns"></xref>, but for now here’s a peek at what
- it looks like:</para>
+ <para>In double entry accounting, transactions always involve at
+ least two accounts–a source account and a destination account.
+ <application>&app;</application> 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 <firstterm>split</firstterm>. A transaction can contain an
+ arbitrary number of splits.</para>
- <screenshot id="basics-DoubleEntryIntro-SalarySplit">
- <mediaobject>
- <imageobject>
- <imagedata fileref="figures/basics_DoubleEntryIntro_SalarySplit.png"
- format="PNG" srccredit="Bengt Thuree" ></imagedata>
- </imageobject>
+ <para>Splits in transactions will be covered in <xref
+ linkend="txns-registers-multiaccount2"/></para>
+ </sect2> <!-- basics-transactions2 -->
+ </sect1> <!-- basics-entry1 -->
- <textobject>
- <phrase>A Split Paycheck Transaction</phrase>
- </textobject>
-
- <caption>
- <para>This image shows entering the date, description and transfer
- account for a <guilabel>$1000</guilabel> <guilabel>
- Salary</guilabel> payment from <guilabel>Employers R Us
- </guilabel>. This is then made into a split transaction to
- <guilabel>Checking Account</guilabel>, <guilabel>Federal
- </guilabel>, <guilabel>Medicare</guilabel>, <guilabel>Social
- Security</guilabel> and
- <guilabel>State/Province</guilabel>.</para>
- </caption>
- </mediaobject>
- </screenshot>
-
- <para>The main principle to remember is that there are at least two
- parts to every transaction, and the total amount transferred from a set
- of accounts must equal the total amount transferred to another set of
- accounts. When a transaction transfers an equal sum from accounts to
- other accounts, that transaction is said to be <emphasis>in
- balance</emphasis>. In <application>&app;</application>, as in double-entry accounting, you want
- to have all of your transactions in balance.</para>
-
- <para>Why is this important to you? If all of your transactions are in
- balance, then your money is all accounted for. <application>&app;</application> has a record of
- where that money came from and where it was used. By storing the names
- of all accounts involved in each transaction, you provide data that can
- be sorted and viewed in report form later. Reports allow you to see
- things like how much money you made for the year and where it all went,
- what your net worth is, and what your taxes might be for the year. The
- more information you provide when entering transactions, the more
- detailed your reports will be.</para>
-
- <note id="acc-terminology"> <!-- <sidebar> -->
- <title>Accounting Terminology</title>
-
- <para>Accountants use the terms <emphasis>debit</emphasis> and
- <emphasis>credit</emphasis> to describe whether money is being
- transferred <emphasis>to</emphasis> or <emphasis>from</emphasis> an
- account. Money is recorded in the debit column, which is always the
- left column, when it is being transferred <emphasis>to</emphasis> an
- account. Money is recorded in the credit column, which is always the
- right column, when it is being transferred <emphasis>from</emphasis>
- an account. Money always flows from the right column of one account to
- the left column of another account.</para>
-
- <para>The main rule of accounting is this: <emphasis>For every
- transaction, total debits must equal total credits.</emphasis> This is
- just another way of repeating the double entry rule, that for each
- transaction, the amount of money transferred <emphasis>from</emphasis>
- accounts must equal the amount transferred <emphasis>to</emphasis>
- other accounts</para>
-
- <para>You don’t have to use the terms debit and credit to use <application>&app;</application>,
- however. <application>&app;</application> account registers default to common column headings
- such as deposit and withdrawal - if you are more comfortable with
- those headings, use them. If you prefer the credit and debit headings,
- you can change the column headings to use accounting labels in the <guilabel>Accounts</guilabel>
- tab under <menuchoice><guimenu>Edit</guimenu><guimenuitem>Preferences</guimenuitem></menuchoice>.</para>
- </note> <!-- </sidebar> -->
- </sect2>
- </sect1>
-
<sect1 id="basics-interface1">
<title>Interface</title>
Modified: gnucash-docs/trunk/guide/C/ch_txns.xml
===================================================================
--- gnucash-docs/trunk/guide/C/ch_txns.xml 2010-11-06 21:37:16 UTC (rev 19768)
+++ gnucash-docs/trunk/guide/C/ch_txns.xml 2010-11-07 04:13:05 UTC (rev 19769)
@@ -120,7 +120,7 @@
<sect2 id="txns-registers-multiaccount2">
<title>Split Transaction</title>
- <para>The need for 3 or more account transactions occurs when you need
+ <para>The need for 3 or more splits in a transaction occurs when you need
to split either the "from" or the "to" account in a transaction into
multiple accounts. The classic example of this is when you receive a
paycheck. Your take home pay from a paycheck will typically be less than
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