Shareholders/Owners Equity Question

quest46 nightflight68 at hotmail.com
Wed Jul 25 11:13:42 EDT 2012


Thanks for the info!

Following your advice, I tried creating sub-accounts, for “Voting”, “Non-voting”, etc. under “Equity” and then transferring the appropriate amounts, from the “Open Balances” and “Equity” accounts.

For example, “Equity” is designated as a “placeholder” or header account. Yet, it shows a “Total”. For now, let’s say its $100.00.

The “Opening Balances” account (a subdirectory of “Equity”) also shows $100.00.

So, for aesthetic reasons, I created “Voting” and made it a subdirectory of “Opening Balances”.

Then I opened “Voting” and, using today’s date, I transferred, say, $100.00, from “Opening Balances” to “Voting”.

Yet, now, “Voting” shows (100.00) while “Opening Balances” and “Equity” each show 200.00 – which makes no sense to me!

Ideally, in my opinion, “Equity” and “Opening Balances” should show 0.00 and “Voting” should indicate 100.00.

Or am I missing or screwing up something?

Please clarify!

- q



From: Mike or Penny Novack [via GnuCash] 
Sent: Wednesday, July 25, 2012 7:14 AM
To: quest46 
Subject: Re: Shareholders/Owners Equity Question


> 
>No. It's not entirely clear from your description what Simply Accounting was trying to accomplish, but 
>those categories, while they might be interesting to an investment management program (which Gnucash is not) 
>are not significant to accounting, and the usage of "Equity" is incorrect. Investments are assets, regardless of what 
>class of stock they might be. Equity is, as Gnucash uses it, the accumulated net value of prior years' business income 
>and expenses. Its misuse by the home mortgage industry notwithstanding, it has no meaning in personal accounting. 
> 
>   
> 
Nope --- Quest is accounting for the business entity, not the investor. 
Just like with an entity organized as a partnership there would be 
accounts under equity indicating the shares of each one there can be 
similar accounts for entities organized as corporations (keeping track 
of what portions of the equity belonged to which class of owners, etc.). 

Quest -- the tutorial isn't going into details like "accounting for the 
small corporation" but that doesn't mean you won't be able to set up 
your books the way you need. The right way to think of GnuCash is as 
automated books (autoposting). If you could set up the books the old 
fashioned way pen and ink on paper then you will be able to do the same 
thing using GnuCash. Your confusion is perhaps that the "simplified" set 
up the books that GnuCash comes with won't create the sort of chart of 
accounts you need but that doesn't mean you can't create it. 

I don't know how far you have gotten setting up books for your entity. 
Let's for a moment say that you have the books opened with initial 
amounts EXCEPT that all the equity is under the main equity account. OK, 
now create children under that account (create accounts of type equity 
whose parent account is Equity). The examples you gave from "Simply 
Accounting" were "Voting", "Non-voting", and "Preferred". Then create a 
transaction (an "opening" transaction) to transfer the amount in Equity 
to its three children. 

Michael 
_______________________________________________ 
gnucash-user mailing list 
[hidden email] 
https://lists.gnucash.org/mailman/listinfo/gnucash-user
----- 
Please remember to CC this list on all your replies. 
You can do this by using Reply-To-List or Reply-All. 



--------------------------------------------------------------------------------

If you reply to this email, your message will be added to the discussion below:
http://gnucash.1415818.n4.nabble.com/Shareholders-Owners-Equity-Question-tp4655858p4655862.html 
To unsubscribe from Shareholders/Owners Equity Question, click here.
NAML



--
View this message in context: http://gnucash.1415818.n4.nabble.com/Shareholders-Owners-Equity-Question-tp4655858p4655863.html
Sent from the GnuCash - User mailing list archive at Nabble.com.


More information about the gnucash-user mailing list