"Close Books" revisited - was Re: Account Balances Louse-up? .

[felix.karpfen at gmail.com]

On Jun 30, 2010 10:28pm, Mike or Penny Novack <stepbystepfarm at mtdata.com>  
wrote:

> Closing the books means creating transaction(s) that close each income or  
> expense account (temporary accounts of fundamental type equity) into the  
> *permanent account equity*

This is where I stumbled. I did no realize that income and expenses are  
classified under Equity.

> About the only thing that looks the least strange to me I might feel  
> better seeing Equity : Expense Total (based on which side debit and which  
> credit) but I imagine THAT would be confusing to other end users who like  
> yourself "knowledge of accounting practice is close to zero"

I am learning a little by reading posts to gnucash-user :-) !
Thanks to the study of recent postings I have learned that "Accounting"  
does not know how to subtract; only how to add. Hence it cannot cope with:

Equity = Assets -Liabilities

That has to be translated into "Assets = Equity + Liabilities!


> However I'd like to make a generally useful suggestion for whenever you  
> come up with a "I don't know what it will do" situation. Not only with  
> GnuCash but pretty much any software.

> 1) Make a copy of your data. In this case that would be the file which  
> are your books. To be really safe, can even move this off into a test  
> directory or even a test "region" (a separate log in with its own data  
> area, etc.)

> 2) Open THAT (the test copy) with GnuCash, try this thing you are  
> uncertain about, see what happens. Worst case scenario you destroyed this  
> test copy. Big deal.

Thank you for the advice and the time you took to write such a full reply.

While my knowledge of Accounting is minimal, I have learned a bit about  
Computing in the past 10 years. The "hard way" - by making mistakes and  
burning my fingers. So I now always make "back-up copies" before trying any  
unfamiliar routine and I religiously try to read the supplied documentation  
whenever confronted with a new routine.

I realize that the GnuCash documentation is a "work in progress" and have  
found the replies posted to "gnucash-user" to be most helpful.

Again, my thanks to both you and Derek Atkins and greetings from Australia.

Felix