how to view total for expenses subaccount

[Donald Allen]

On Thu, Oct 30, 2008 at 7:48 AM, Mike or Penny Novack
<stepbystepfarm at mtdata.com> wrote:
>
>>
>> Thanks for that, but I this is exactly how I enter my transactions. My
>> original problem was including the Liabilities that went somewhere in
>> the Expenses account in the Cash Flow report.
>
>
> This isn't related to the fact that we might be using GnuCash to
> automate the keeping of the books and producing the reports. The "cash
> flow" report is important (or income/expense report or whatever is
> showing income and expenses for a period) but it is usual to supply
> along with this  "balance sheet" reports for the start and stop dates of
> the period. It is these that would show the change in liabilities and
> assets.
>
> Fundamentals. Assets = Liabilities + Equity
> You can rearrange, so Assets - Liabilities = Equities and thus changes
> to (Assets - Liabilities) = changes to (Equity)
>
> You can think of Equity as "net worth".
>
> Accounts of type "Income" and "Expense" are temporary accounts used to
> categorize those changes to equity during an accounting interval. If the
> total of income is greater than the total of expenses, net worth is
> increasing, otherwise decreasing, the most famous literary definition
> being in "David Copperfield" by Dickens.

Correct me if I'm wrong, but I believe this is not necessarily true.
For example, if income > expenses during an accounting period, but the
value of your assets decreases during that period by an amount greater
than income-expenses (as many of us have experienced during the recent
stock market turmoil), your net worth decreases, contrary to what you
said above.

/Don

 But this alone doesn't show the
> position relative to CASH (current assets immediately available). That's
> why you need also produce the balance sheets. It's not just  liabilities
> you need to worry about  but possibly assets also  (some of that income
> might be increase in assets but not CURRENT assets so that while your
> net worth has increased you might have a CASH problem --- or conversely,
> your cash position might be excellent but headed toward a crash because
> liabilities increasing faster).
>
> Michael
>
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