Balance sheet after using "Close book"?

Mike or Penny Novack stepbystepfarm at mtdata.com
Wed Jun 23 07:53:49 EDT 2010


This is definitely a "terminology" problem plus a problem with your 
expectations of what you expect ONE report to show you.

"I just stumbled upon the "Trial Balance" report, which seems to let me
filter out the transactions from the "Close Book" function. That /looks/
like what I need. I need to double check that I've understood it
correctly, though."

Need a little bookkeeping/accounting basics? Not the use of a "trial balance" report. To be honest, while these important in the days of old fashioned pen and ink on paper bookkeeping you shouldn't need to very often track down errors when you use GnuCash.

What you usually will want (for every accounting period, the time interval since you last ran these) are TWO reports. 

1) Balance Sheet --- this report will show you assets, liability, equity. Here's where you see "how much do I have in the bank" (as well as the value of other assets) and "how much do I owe". A bit of history? Hundreds of years ago at the birth of double entry bookkeeping income and expense transactions were immediately entered against equity. It was then found advantageous to defer that so that one could see the totals for each income or expense account and only at the end of the accounting period transfer to equity (close the books). 

2) Income Statement (aka Profit and Loss aka Revenue Statement depending on what sort of entity the books are for). This shows all the income and expense accounts and the net balance as a gain or loss for the period not yet entered against equity. So here you see what you spent on hotels, etc. 

NOTE -- what you spent on "Hardware" may or may not be an expense depending on what sort of entity you are doing the accounting for, organizational rules, etc. Technically the purchase of hardware would be buying a "fixed asset" and not an immediate expense. The expense is entered over time as that asset depreciates through wear and obsolescence. The organizations for which I keep books are non-profits and so allowed freedom in setting their own rules. Thus if I bought and external drive for backup costing $200 I could immediate expense it but if I bought a laptop for $600 I could not (since one amount is below and one above the organization "de minimis" amount for fixed assets). 

Michael 

PS ----- Really need to try to understand "fundamentals of double entry 
bookkeeping". GnuCash is a tool. Like any other tool you need to learn 
both how to use it and what to use it for and those are different. Think 
woodworking and a saw. One thing to learn how to handle a saw so that it 
cuts straight to the line, to learn how to keep it sharp, etc. Quite 
another to learn what sorts of things you can construct out of cut 
pieces of wood.




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