Best way to organize accounts

[David Bear]

Actually, gnucash uses the 'double entry' method of accounting. The
confusion occurs with the word 'account'. A savings account, checking
account credit card account do NOT NECESSARILY map to an 'account' in a
ledger. That is why an 'expense account' does not exist in the 'real world'.
An expense account represents the 'other side' of a two sided entry. Any
time any 'transfer' takes place whether it is to receive income or record
and expense there are TWO entries (or two transactions). For example, when
you buy lunch, you record that as an expense in the category of food. But
that is only one side. You also need to specify 'where' the money came from
to pay for the lunch. That money could come from your pocket change (petty
cash), a checking 'account' or a credit card.

In your response below you use the word transfer. That is not semantically
correct either in this contest. There is no transfer taking place. There are
only 2 entries recording the income. There is an entry in the 'income
account' called 'interest income' and an entry in the 'asset account' called
'checking'.

On 8/24/06, Derek Atkins <warlord at mit.edu> wrote:
>
> eschvoca <eschvoca at gmail.com> writes:
>
> > Thanks for the responses.  I think I understand my problem.  When my
> > bank account makes an income (e.g. from interest) I should transfer it
> > _from_ an Income account _to_ an Asset account.  I was thinking the
> > transfer happened in the other direction.  Then my balance in the
> > Asset bank account should equal the balance of the bank statement.  Is
> > that right?
>
> Yes.
>
> -derek
> --
>        Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>        Member, MIT Student Information Processing Board  (SIPB)
>        URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>        warlord at MIT.EDU                        PGP key available
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-- 
David Bear
What's the difference between private knowledge and public knowledge?