Basic Accounting Concepts - what am I missing?

Mike or Penny Novack stepbystepfarm at
Sun Jan 2 18:02:03 EST 2011

>You are double-counting. Expenses and income are (at least in Gnucash)
>immediately posted into Assets or Liablilities. In traditional
>journal-oriented bookkeeping, the journal is posted into the General Ledger
>periodically, so that to obtain an intermediate picture, you have to
>consider the journal entries as well as the General Ledger.

GnuCash is standard journal + ledger accounting except that these steps 
of first entering the transaction in the journal and then later posting 
into the ledger has been automated. Since errors made while posting were 
one of the headaches of old fashioned pen and ink on paper bookkeeping 
this "autoposting" is wonderful.

Normally we enter the transactions working from the ledger account of 
ANY of the accounts affected. We get to specify the other account(s) and 
how much split to each (if it is a split). GnuCash builds the 
corresponding journal entry for us (you can ask to see the journal; one 
of the reports).

The journal is the time ordered record of activity. The ledgers hold 
that activity segregated into like types (and then within that ordered 
by time). You could think of the whole thing as simply a pile of 
transactions (each double entry grouped and ordered in different ways).

BUT --- no, expenses and income are not "immediately posted into assets 
or liabilities". That's not what "posting" means. Any transaction 
affecting an account of type income (or expense) will also normally* be 
affecting an account of type asset or type liability as the other side 
of the double entry. All transactions add a net zero to the books (they 
remain in balance).


* Conceivably could be equity on the other side of the transaction. For 
example, if I paid an expense of my business using my PERSONAL check 
then I have in effect "made an additional investment" in the business -- 
the opposite of a "draw".

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