Basic Accounting Concepts - what am I missing?

[jomali]

On Sun, Jan 2, 2011 at 6:02 PM, Mike or Penny Novack <
stepbystepfarm at mtdata.com> wrote:

>
>  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).
>
> Michael
>
> * 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".
>

Thanks for the correction. Not being an accountant, I become confused about
terminology and misuse the terms. I appreciate the education. However, isn't
my identification of Jim Smith's problem as double counting correct?

John