Old Loans and "Retained Earnings"
David Overton
doverton@bigpond.net.au
Mon, 15 Oct 2001 11:33:35 +1000
On Thu, Oct 11, 2001 at 12:09:52AM -0400, Roland Roberts wrote:
> I was sure this was discussed at some point, but can't find it in the
> archives.
>
> I'm converting from Quicken to GnuCash 1.4. I have some old loans
> where, in Quicken, they simply had an "initial balance" shown.
> Quicken sets this up as going to a "Retained Earnings" asset account.
> Now that would be fine if it weren't for one little problem: the loans
> were student loans and the cash went to educational expenses in a
> period preceding what is covered by either Quicken or GnuCash.
>
> So, I have these funny-looking balances which say I have a lot of
> money in "Retained Earnings". How can I do this so it more closely
> resembles reality? Do I need to add some old/bogus expenses "college
> tuition" to make the entries go away?
The retained earnings account should have type "Equity" rather than
"Asset".
>
> A related question is, if I should decide to close out the books at
> the end of the year and start a new set, the GnuCash way is to
> transfer your account balances to an asset account and then back out.
> What does this look like for loan (liability) balances? Same thing
> except the balances are of the opposite sign?
>
Again here you should be using an equity account, not an asset account.