N00b question: expenses & equity

[Mike or Penny Novack]

>Short answer: In GnuCash, you just run an Equity report and it immediately tells you what your current equity is. Each time you enter an expense and reload (refresh) the report, you’ll see your equity decrease.
>
>Long answer: It’s an accounting thing. The equity account balances will not change until you ‘close the books’, so to speak. Traditionally this meant annually entering one or more closing transactions to zero out all your income and expense accounts and move their balances to equity (retained earnings) accounts. This would effectively make Equity the sum of all income minus all expenses for the year.
>
>Hope this helps,
>
>  
>
When accounting was in its infancy (Renaissance) income and expense 
transactions were entered against Equity immediately. That made it easy 
to see what net worth at any instant but lost all information about 
categories of income and expense items. So somebody came up with the 
bright idea of income and expense accounts as TEMPORARY accounts of 
fundamental type Equity. Now easy to see what all the income and expense 
totals are and at intervals these can be closed to main Equity.

If you run the Income Statement report (aka Profit and Loss aka Revenue 
Statement etc.) it will show you the net change to equity for the period.

It might help if you understand even more of the history? It only looks 
like a lot of extra work doing it this way. But back then they couldn't 
even see the balance of any account without doing extra work so the 
trial balances, etc. they did and which would show "what's equity now" 
wasn't adding much work for them back then.

Michael