Best way to organize accounts

[eschvoca]

Thanks for the clarification.  One more question.  I have a "line of
credit" account which also functions as my checking account (I rarely
have a positive balance).  Since I want to use my downloaded statement
(which has a credit balance) then should I set this account up as a
liability?

-E

On 8/25/06, David Brock <david at tubits.com> wrote:
> This is true for a very limited definition of the word "account" but
> really, asset accounts and liability accounts are just as theoretical as
> expense and revenue accounts, we're just more used to the idea that my
> "savings account" (asset) has $X in it, or that I owe $Y on my mortgage
> (liability).  In fact, it's called an "account" because that's just what
> it is - an account of money.
>
> The bank doesn't have a physical mail slot where they put your $10's &
> $20's, rather, they take the money that they've "accounted" for as
> yours, and they (usually) loan it out to someone else, and "account" for
> it.
>
> An expense or revenue account is simply a record of where the money
> "came from" or "went to".  An asset or liability account is where the
> actual money "is" or "isn't".
>
> Gnucash, and double entry accounting, does it correctly.
>
> ;-David
>
> On Thu, 2006-08-24 at 18:54 -0700, David Bear wrote:
> > 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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