close books

[Ken Heard]

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Phil Longstaff wrote:

> Equity
>     Retained Earnings
>         Income
>         Expense
> 
> Retained Earnings is the term used for businesses.  I'm not sure if there's a 
> better term for home use.

The term "retained earnings" refers to what is left to the business from
earnings after some, maybe most of the profits have been distributed to
its owners.  It is consequently not in my opinion a suitable term to use
in a personal accounting system.  Instead I use the term "adjustments in
net worth":

	Net worth:
	   Opening balance +
	   	Net worth adjustments for current year ±
			Receipts +
			Less expenses -
	   	Asset re-evaluation ±
	   	Etc ±
	   Closing balance +.

If the closing balance is not a plus you are in trouble.  For example,
is the balance owing on your mortgage more than the value of your home?
		
> I used to be a hypochondriac AND a kleptomaniac. So I took something for it.

What did you take? Did it work?

Ken Heard
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