Account Types

[Charles Day]

On Fri, Sep 12, 2008 at 9:59 AM, Mike or Penny Novack <
stepbystepfarm at mtdata.com> wrote:

>
>
>>>
>>
>> Generally the top level of your chart of accounts (account tree) contains
>> only those four account types.
>>
> Three, not four ........assets, liabilities, and equity.
>

Ah yes, I forgot equity. So really, I use five at the top level. Even though
income and expense are considered temporary, I find it easier to keep them
at the top, rather than under equity, as it makes account selection that
much faster. Besides, for personal finance I never close the books. So for
me they are permanent in practice. I almost never enter new transactions
involving equity accounts.


> Income and expense are both temporary accounts of fundamental type equity.
> Their purpose is to provide information for the current period and show the
> totals of these most important sources of CHANGES to equity.
>
> In other words, DURING the accounting period likely to be leaving equity
> entirely alone with the transactions (in reality altering equity) being
> recorded as either income or and expense. At the end of the period, these
> are closed into equity as the net gain or loss for the period and the next
> accounting period begins with all income/expense accounts zeroed out ---
> which is why I described them a "temporary".
>
> Michael
>

-Charles


>
>
>
>
>  But why make the user build the most common
>> account types themselves? GnuCash just has them already built for you
>> (like
>> Quicken). Besides, there isn't currently an option to add your own account
>> types anyway. Also, there are some differences in the way account types
>> are
>> treated. I'm not familiar with the exact differences between all of them.
>>
>> For example, stock and mutual fund types get a "price" column in their
>> registers, and can be denominated in non-currencies. However these two
>> account types are currently identical in all but name. So the distinction
>> between "stock" and "mutual fund" assets are unknown to the software, and
>> in
>> fact these account types could be used to track any asset at all that
>> needs
>> a price column. These two account types could be made distinct and more
>> useful if the GUI treated them differently. (For instance, options to
>> distribute capital gains could be enabled for mutual fund accounts, but
>> disabled for stock accounts.)  There is lots more work to be done in the
>> investments area.
>>
>> I can't speak to the other account types. Some of them might be the same
>> in
>> all but name, too.
>>
>>
>>
>>
>>> I may not have been using GnuCash long enough to appreciate the
>>> differences, but it would enhance my understanding of the product if I
>>> had a better idea as to why these distinctions are made.
>>>
>>> Thanks,
>>> Ken
>>>
>>>
>>>
>>
>> -Charles
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>
>
> --
> There is no possibility of social justice on a dead planet except the
> equality of the grave.
>
>