# Patch for guide file "ch_basics.xml"

Sat Oct 16 08:59:14 EDT 2010

```Hi Geert,

On Thu, 2010-10-14 at 20:24 +0200, Geert Janssens wrote:
> I didn't know either how this value is calculated. But I looked it up in the
> code for you:
thank you! Can you please let me know, where in the code this happens,
just for me to gain some understanding of the programming.

> "Assets" is the sum of all accounts of types Bank, Cash, Asset, Stock, Mutual
> Fund, Credit Card, Liability, A/Payable and A/Receivable, obviously taking the
> proper sign into account. Calling this "Assets" would indeed be confusing at
> least.
> "Profits" is the sum of all Income and Expense accounts.
According to the guide, the nine accounts are the balance sheet accounts.
According to the guide (section 3.2.1), there are 6 accounts of type
Asset:

Bank, Cash, (other) Assets, Stock, Credit Card, A/Receivable

and 3 accounts of type Liability

Credit Card, Liability , A/Payable

Adding them with the appropriate signs (i.e. Assets - Liabilites),
according the first equation in section 2.1.2 would make the sum the
'Equity'.

Going by the second equation in section 2.1.2, the 'Assets' column in
the summary bar is the sum of the account 'Equity' and Profits, which
also is the result of my experiments.

> Trading accounts and equity accounts are not counted at all. There is a note
> in the code that wonders if trading accounts should be treated as
> Income/Expense and hence be used in the Profits calculation.
>
> What would be a better word for Assets in the summary bar ?
I suggest 'net worth'.

The problem with this would be, that in the Guide, section 2.1.1,
'Equity' is defined as 'overall net worth' and used as synonym.
The solution to this conflict would be, to break the equating of
'Equity' and 'net worth' and use the term 'Equity' in a static context
(like discussing opening balances) and use the term 'net worth' in
dynamic context.
In my understanding, this would give the term 'Equity' a special meaning
in GnuCash (i.e. different from the real world). This should be
explained somewhere in the text or in a glossary.

> And can someone give a hint as to what should happen with the trading accounts
> ? My accounting knowledge is too limited to answer that.
>
> Geert

Juergen

```