Equity account

[Trenton Hall]

Thank you for the prompt answer.  What I wanted to know was, did I have to
added money, to the Equity (opening balance) when I first set it up.  After
looking at the demo on Youtube.I see I don't.
That the addition from asset accounts will automatically fill in the
Equity.  I think I was thinking about the "Capitol" used to start a
business, not so in my case.

On Mon, Feb 20, 2012 at 2:13 PM, Tom Collier <tom.collier at comcast.net>wrote:

> **
> I'm going to go out on a limb here and presume to give one of many
> possible answers to your question. There are accountants and bookkeepers
> who are much more qualified than I and could (and probably will) go into
> exquisitely detailed answers, but here is a vastly oversimplified answer:
>
> Equity is where the the "accounting equation" (Equity = assets +
> liabilities) shows you how well you are doing financially.  If you have
> positive equity, you're good to go. If you have negative equity, that's
> technically called "bankruptcy" ... a consummation devoutly to be avoided.
>
> As you use GnuCash, it will calculate and adjust the Equity account
> without your direct intervention. What the Equity account shows will vary
> depending on what you are using GnuCash for.
>
> Business uses, payables and receivables, fixed assets, and the like will
> show equity differently than if you are using GnuCash for personal
> finances. For personal finances, Equity will vary depending on whether you
> are tracking things like mortgages, car loans, stocks, bonds, and so on or
> whether you are using GnuCash simply to keep track of your checking account
> and credit cards.
>
> In practice, if you don't use the Druid for the initial information, you
> use the sub-account "Opening Balances"  as you setup GnuCash.
>
> Example setting up GnuCash for the first time: I have $100 in my checking
> account; so I "deposit" $100 and choose "Equity:Opening Balance" in the
> Transfer Column. Example 2: I carry a $100 balance on my credit card, so I
> enter a charge of $100, then choose "Equity:Opening Balance in the Transfer
> Column of the register.  So....If I only have $100 to my name and owe $100
> on the credit card, GnuCash will calculate that I have $0 equity.  Vast,
> vast oversimplification, but it illustrates what Equity does.
>
> If you use GnuCash simply to track checkbook and credit cards, as I do,
> then Equity just shows in vastly simplified terms, whether my personal
> cashflow is behind or ahead of itself.  Your mileage may vary.
>
> Tom
>
>
> On Mon, 2012-02-20 at 06:47 -0500, trenton hall wrote:
>
> Just starting to work on this and I've got what may seem obvious, but not to
> me.  I don't understand how this Equity account works. Do I have to first
> add money to it, or can I just start an opening balance in say my savings
> account, by way of the Equity opening balance.?   Thank you
>
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