Balance Sheet Confusion

Jannick Asmus jannick.news at gmail.com
Tue Jul 8 03:03:36 EDT 2008


Hi Tony,

On 08.07.2008 03:26, Tony Nelson wrote:
> Hi Jannick,
> 
> Here is the balance sheet as of 9/30/07, and 7/2/08.    To answer
> Charles' question, yes the balance sheet does balance.
> 
> The Net Income as of 09/30/07 is $56,626.36
> 
> The Net Income as of 07/02/08 is -$26,729.73
> 
> Balance Sheet 09/30/2007

[snipped] - see 
https://lists.gnucash.org/pipermail/gnucash-user/2008-July/025923.html 
for reference.

What happens if you exclude the account "opening balance" in the balance 
sheet report? (See Report options > Accounts)

The reason behind my question is that, to me, GnuCash seems to be 
confused that the initial values for equity accounts are booked *twice*: 
(1) Common Stock and Retained Earnings (an account you might have 
introduced, but not GnuCash) and (2) Opening Balance. I believe GnuCash 
tries to balance accounts at any price by automatically booking in the 
balancing item "Retained Earnings" (which I think is different to the 
account mentioned under (1) above).

In general initial values (opening balances) must not summarized under 
equity *if* the initial values of each of the equity sub-accounts are 
booked in at the beginning of the period. They are to be excluded from 
reports - unless you what to have some inappropriate kind of "double 
accounting". ;)


In so far I must withdraw my comment in one of my prior postings that 
opening balances should show up under equity.

BTW: After thinking a bit more on this I am wondering how you offset the 
initial values of common stock and retained (as in (1) above)?

Best wishes,
J.

> On Tue, 2008-07-08 at 01:14 +0200, Jannick Asmus wrote:
>> Hi Tony,
>>
>> On 08.07.2008 01:00, Tony Nelson wrote:
>>> Hi Jannick,
>>>
>>> Here is the equity statement:
>>> Equity Statement For Period Covering 09/30/2007 to 07/02/2008
>>>                
>>>                
>>>
>>>
>>> Capital, 09/30/2007
>>>    
>>>               $56,626.36
>>> Net loss for Period
>>>               $26,729.73
>>>    
>>> Investments for Period
>>>              $984,726.34
>>>    
>>> Withdrawals for Period
>>>              $984,674.83
>>>    
>>> Decrease in capital
>>>    
>>>               $26,678.22
>>> Capital, 07/02/2008
>>>    
>>>               $29,948.14
>>>
>>> I believe the $56,626.36 is a function of the way we recorded Accounts
>>> Receivable at  the beginning of the year.  I'm going to rework that, and
>>> I believe it will go away.
>> I might be helpful to have a look at the balance sheet as at 09/30/2007 
>> and how your initial values can be traced.
>>
>>> Thanks as always,
>>> --Tony
>> Best wishes,
>> J.
>>
>>
>>> On Tue, 2008-07-08 at 00:37 +0200, Jannick Asmus wrote:
>>>> Hi,
>>>>
>>>> On 08.07.2008 00:20, Tony Nelson wrote:
>>>>> Hi All,
>>>>>
>>>>> I hope you don't mind if I share some numbers as I think it will make my
>>>>> question clearer.
>>>>>
>>>>> In QuickBooks I have used "Retained Earnings" to designate earnings that
>>>>> remain in the company as we move forward from one year to the next.  So
>>>>> I have set up an equity account called "Retained Earnings".  
>>>>>
>>>>> GnuCash seems to use Retained Earnings to record a running Income
>>>>> Statement, yet this GnuCash Retained Earnings number does not match
>>>>> anything that I can find.  
>>>>>
>>>>> Anyway, here is part of my balance sheet:
>>>>>
>>>>> Equity
>>>>> Equity
>>>>>     Common Stock		$47,686.74
>>>>>     Retained Earnings	       $8,991.13
>>>>> Retained Earnings              $29,896.63
>>>>> Total Equity                   $29,948.14
>>>>>
>>>>> Now if I take the Common Stock value ($47,686.74) and add it to my
>>>>> retained earnings figure ($8,991), and subtract my current net income as
>>>>> shown on my GnuCash Income Statement for this year (-$26,729.73) I end
>>>>> up with $29,948.14 -- My Total Equity number above.
>>>>>
>>>>> I have two questions: 
>>>>>
>>>>> 1) Why does my Net Income not show up in the Equity portion of the
>>>>> balance sheet (it does under QuickBooks)?
>>>>>
>>>>> 2) What is the $29,896.63 number and where did it come from?
>>>> What does your equity statement (under Reports > Income & Expense) look 
>>>> like?
>>>>
>>>>> Thanks to any of you who take the time to work through this.
>>>>> --Tony
>>>> J.
>>>
> 
> 


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