withdrawals/deposits

Mike or Penny Novack stepbystepfarm at mtdata.com
Tue Jul 29 10:46:24 EDT 2008


>Create a transaction from Equity:Opening Balances into this account.
> From your Checking it would be a Deposit.
>  
>
Terminology confusion?

Yes you might be entering this transaction into the column which for a 
checking account might have a title of "deposits". But the transaction 
itself isn't a "deposit" and so the description should be something like 
"opening balance". You might have other transactions that increase the 
balance of your checking account that are not "deposits" per se. For 
example, that might be an interest paying account in which when you 
enter these the description would be "interest". When you do make a 
deposit, then "deposit" would be the correct description entry.

Similarly with the other side. You write checks against this account and 
here the description usually the payee. You may also have bank 
charges/fees, charges for a supply of new checks, interest charges for 
overdrafts, etc. All these go into the :withdrawals" column but the 
descriptions are different.

I think part of the confusion is with the system trying to help you with 
what are (usually) more meaningful titles than simply "debits" and 
"credits".

Again I have to say it --- a computerized accounting system like GnuCash 
is MOST useful assuming that you already know something about standard 
bookkeeping. It can't tell you what to do. What you need to understand 
that when doing it the old fashioned way pen and ink on paper 99% of the 
errors are transcription errors and errors in arithmetic and the 
computerized systems do "posting" and "arithmetic" perfectly and 
immediately detect if you have entered a transaction out of balance. But 
GnuCash (nor any other such system) can't prevent you from doing it "all 
wrong".

Michael

NOTE: You are perhaps imagining a multicolumn account of the sort used 
in old fashioned bookkeeping known as a "cash book" which in addition to 
a fundamental pair of debit/credit columns had columns reserved for (and 
with suitable titles) for the most common accounts against which petty 
cash transaction would take place. The reason for this is precisely the 
many errors that took place in posting transcription as this method 
reduced the amount of "posting" that took place (only the totals of the 
columns would be posted each period). In other words, a business didn't 
want to have to post separately each time the office secretary went out 
and bought stamps from petty cash but once a month or whenever to total 
of the "postage" column got posted to the ledger.


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