Balance sheet after using "Close book"?

[Mike or Penny Novack]

Soren

>>Not quite. You aren't understanding the part of the double entry
>>system called "equity". The fundamental equation is assets =
>>liabilities + equity That's the usual way shown to avoid any
>>subtracting (double entry bookkeeping only adds) but it may make more
>>sense to you as assets - liabilities = equity In other words, what you
>>have minus what you owe is your net worth.
>>    
>>
>
>I think I understand the maths ok. It's the presentation that gets me.
>Everywhere I've seen this presented (in examples on-line([1] and [2],
>for instance) or in my years of serving on various boards of different
>organisations), equity is listed under liabilities.
>  
>

I'll try again:
    The way most people think the fundamental equation would be 
understood as:
assets - liabilities = equity (net worth)
    The way to check this equality would be to add up all the assets to 
get total assets and add up all the liabilities to get total liabilities 
and add up all the equity components (if more than one) to get total 
equity and then SUBTRACT total liabilities form total assets -- see of 
the result matches total equity as it must if the books are in balance.

    The way traditionally done in bookkeeping is to express that 
equation as:
assets = liabilities + equity  (which you get from the first form by 
adding the liabilities to both sides of the equation)
    WHY? Because now there is no need to subtract. The only arithmetic 
operation used in double entry bookkeeping is addition  so there is no 
need to use an operator symbol (and so not even the slightest chance of 
an error caused by adding when should have subtracted or vice verso).

Michael

PS: Some of this would perhaps make more sense if you had ever seen 
bookkeeping done the old fashioned way pen and ink on paper with the 
single lines drawn across both sides of a ledger account and the sums 
underneath and then a double line indicating in balance at that point. 
You never sum back across a single line and don't go back at all across 
a double line. In the old days, lots of mistakes (transcription errors, 
misreading a digit errors, etc.) so real helpful to be able to be 
certain mistake can't be back before this point. BTW: that's where the 
"trial balance" report was used, checking that "in balance of all the 
ledger account.

One of the biggest benefits of autoposting software like GnuCash is that 
it will never make a transcription error, never misread or transpose 
digits, etc.