account transition to new year

[Enrique Barahona Ramos]

Hi, sorry if this has been adressed before in the list, I'm new to 
gnucash and personal accounting.

My question is, I've been entering chequing account transactions for 
2004, but the moment I enter an expense transaction in January 2005 
gnucash displays a loss equal to the amount for the 
transaction/transactions, even if the checking account balance is 
positive. Income transactions don't appear as profit though.
I'm guessing it has to do with the financial year, so my question is how 
does one handle the transition from one year to another.
I read in the manual one is supposed to transfer the income-expense 
balance to an equity account, but how is this done?
If i transfer the assets balance to my equity account then I get twice 
as much equity, which can't be right.

Or should one keep one file for each year, and just enter the balance as 
the equity in the new year account?

Thanks,

Kiko