Questions About Balance Sheet and Income Statement

[Mark Phillips]

James,

Thanks for the clarification. It is now beginning to make sense. I have a
transaction that relates to this issue and I am not sure if I entered it
correctly.

I started using gnucash just for my checkbook in 2011. I entered two months
of data to get a snapshot income statement. I then stopped using it until
Jan 2103. In order to reconcile the Jan 2013 statement I had to adjust the
balance in the checkbook on Dec 31, 2012 to match what was on the bank
statement. I did not want to enter all the past transactions in 2012. I
created a fake transaction like this to bring the checkbook register to the
right amount on Jan 1, 2013

Assets:Checkbook credit $X
Expenses: Adjustment debit $X

Should I have done this instead?

Assets:Checkbook credit $X
Equity: Opening Balance checkbook debit $X

It has a big impact on the retained earnings number.

Or, should I delete all the 2011 and 2012 transactions, the above
Adjustment to expense, and change the opening balance for the checkbook to
be the correct value for 12/31/12?

Thanks,

Mark

On Sun, Apr 7, 2013 at 12:19 AM, James Kerr <
jim at jkerr82508.free-online.co.uk> wrote:

> On 07/04/2013 1:41 AM, Mark Phillips wrote:
>
>> I am confused. I ran an income/expenses report for 1/1/13 - 1/31/13 and
>> included all the income and expense accounts. I then ran a balance sheet
>> for 1/31/13 and Assets = L + OE, as I would expect, but the Retained
>> Losses
>> = $4,270.76 and the Net Income on the income statement is $1,074.74
>>
>> 1. Shouldn't these two amounts be the same?
>>
>
> No.
>
> Profit/Loss is for a specific period.
>
> Retained Earnings/Losses are the sum of all profits/losses since the
> business began.
>
>
>
>> 2. How do I find out the reason for the difference?
>>
>>
> Run a Balance Sheet at the preceding 12/31.
>
> Jim
>
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