Equity-Opening Balance

[Yawar Amin]

Hi,

Your basic question is, what is equity. At its simplest, equity is what
you're worth at the end of the day after paying off everything you owe
(including bills).

On 1/27/10 10:01 AM, Collier-Sanuki Yoko said:
> I'm a new user.  I've searched and read various GnuCash information
> but cannot find an answer to my simple question:
>
>     GnuCash creates as a default "Equity" place holder and "Opening
> Balance" under it.
>     But what else goes under "Equity"?  Why not just make "Opening
> Balance" top-level account?

It depends on your reporting needs. If you just want the kitchen-table
figure (taking all your assets and liabilities and putting them on the
kitchen table to figure out your net worth), sure you can have a single
equity account for your opening balances and end-of-year closing
transactions. If you want to separately track how much equity you
started with at the beginning of the year and how much equity you gained
during the year, then you typically set up separate equity sub-accounts
for those different tracking needs.

>
> Here is an example of help, which doesn't help me :{
> [...]
>>
>>     • I don't really understand equity. I think it's like assets, but
>> it can't be spent. The money for our opening balances was taken from
>> here.
> [...]
> Any help?

There's help and there's help :-) Try
http://en.wikipedia.org/wiki/Shareholders%27_equity#Accounting

HTH,

Yawar


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