Equity Question

[Josh Sled]

"Maf. King" <maf at chilwell.net> writes:
> On Tuesday 18 August 2009 07:49:20 ooby wrote:
>> Hi All,
>> I'm new to this so possibly this is a really stupid question.  I have set
>> up all my accounts etc.  I have an Equity account with a sub-account called
>> Opening Balance with $500 in it (this is an example).  The $500 is from a
>> few different Asset Accounts.
>>
>> I went and entered that I paid my Credit Card of $200 from one of my Asset
>> Accounts.  The Asset accounts now show that I have $300 but the Equity
>> account has changed at all, it still shows $500, the original amount.
>>
>> My understanding of this is that the Equity should also show $300.
>> If I open the Equity account it shows the opening balances and isn't
>> reflecting that one of the Asset accounts is now minus $200
>>
>> I have reconciled everything as well
>>
>> Am I missing something or not getting it?
>>
>> Thanks
>>
>> ooby
>
> Hi ooby,
>
> I think that the equity you are looking for is calculated in the (net worth)? 
> report.  The "Equity" sub-tree in GC is not dynamically updated with the 
> changes made to Income, assets etc. accounts.
>
> Think of the "Equity" sub-tree as a place to keep things like opening balances 
> (or retianed earnings etc.) which need to be included in the accounting 
> equation definition of equity, but don't fit as assets or liabilities.
>
> Any help, or just more confusing?

I usually phrase this when the question comes up in IRC as: you should
think of the "Equity" *account* as – and it probably should be renamed
to – "Equity Adjustments".  "Instantaneous" Equity, as per the
accounting equation, is only available by running a report.

-- 
...jsled
http://asynchronous.org/ - a=jsled; b=asynchronous.org; echo ${a}@${b}
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