Accounting principles Of Double entry

[Amit Sathe]

> Message: 3
> From: "Robert W. Brewer" <rbrewer@Op.Net>
> Subject: double entry and accounting equation
> To: gnucash-devel@lists.gnumatic.com
> Date: Wed, 27 Sep 2000 00:14:26 -0400 (EDT)
> Reply-To: rbrewer@Op.Net
>
> I'm using gnucash 1.4.6 under Linux.  It seems to be
> pretty nice for tracking my personal finances.

When was 1.1.6 released, i have missed the event !

> I have some questions though.  I'm
> an accounting newbie, but I've been reading up on enough
> accounting lately to be dangerous.  :)
>
> My "Accounting for Dummies" book says that the fundamental accounting
> equation is
>
> assets = liabilities + equity

Yes the fundamental equation is assets(what you own)=liabilities ( what you
owe.)
The accounting principles also assume your business to be separate from
yourself so
equity is really what the business owes its proprietor(s) ie you in this
case.


>
> To me this seems to be how the whole double entry system works.
> I read somewhere in the online help that opening balances should
> be taken from an equity account, and this matches what the "Dummies"
> book says too.
>
> But when I create fresh assets and equity accounts, then transfer my
> opening balance from equity to assets, I'm left with a negative equity
> account balance.  Is this what I want?  I would think it should be
> positive so the above fundamental equation would be satisfied.

You can check that the opening balances which you are feeding in are taken
from a balance sheet or tallied trial balance.
Also there are some accounts like loans and advances that appear on both
sides so care should be taken that they are properly entered. ie a loan
given is entered on assets and a loan taken on liabilities.

Instead of being "left" with equity as the balancing figure you can aslo key
in the same if you have a balance sheet.


>
> -Rob
> --
> Robert W. Brewer


Reagrds
Amit