General Journal

[Buddha Buck]

You are right, a journal and a ledger are two different things.

GnuCash uses neither term, and does not conflate them.

A "journal", according to dictionary.com, is either a daybook or a book in
which transactions from the daybooks are written to facilitate posting to
the ledgers.  A "daybook" is a book in which the transactions of the day
are written in the order they occurred.

The important thing here is that a journal is an ordered record of
transactions.  It's the transactions that are important, not the book
itself.

GnuCash has transactions, and provides many ways to record them.  It does
not provide direct access to anything called a "Journal", although it
maintains an ordered record of transactions, and does provide a method for
seeing all transactions in a time-ordered manner.

What is a transaction?  It's a dated collection of ledger entries with the
restriction that the sum of debits in the transaction equals the sum of
credits in the transaction.  Fundamentally, a ledger entry is simply a
record of an account, a debit amount, and a credit amount.  Every ledger
entry belongs to a single transaction.  Everything else about a ledger
entry or a transaction is additional data which may help the bookkeeper,
accountant, or business owner maintain the business.

GnuCash calls ledger entries (as defined above) "splits".  It does not
provide direct access to anything called a "Ledger", although it maintains
a collection of splits associated with each transaction, and provides ways
of seeing all transactions which affect a particular account (what one
would traditionally look at a ledger for).

Saying that GnuCash treats journals and ledgers equivalently, or implies
that they are equivalent, is a misunderstanding of what GnuCash does.

GnuCash registers (where most data entry takes place) provide a filtered
view of the ordered transaction list (the internal equivalent to the
General Journal), usually limited to transactions which involve a chosen
account.  Every entry in a register reflects the entire transaction,
especially when expanded as a "split transaction", where all accounts and
the debit/credit amounts are explicitly spelled out.  When the transaction
is not expanded as a split (and only involves two accounts) some of the
account and debit/credit information is implicit, not explicit, but it's
still there.



On Thu, Aug 8, 2013 at 11:37 AM, <cgw993 at aol.com> wrote:

>
> Thanks for your input, I guess I don't see how the journal could be
> equivilant to the ledger or why users would buy into that statement. They
> are two completely different things.
> -----Original Message-----
> From: Michael Hendry [mailto:hendry.michael at gmail.com]
> Sent: Thursday, August 08, 2013 1:51 AM
> To: cgw993 at aol.com
> Cc: 'Buddha Buck'; 'GnuCash Users List'
> Subject: Re: General Journal
>
> On 8 Aug 2013, at 03:20, cgw993 at aol.com wrote:
>
> >
> >
> > Thanks for sharing.   I should just use the generic term Journal instead
> of General Journal.  I guess I had assumed GNUcash would have used old
> school traditional bookkeeping practices because that is how I learned to
> do
> bookkeeping and the method I want to stick with.   I don't want to have to
> create a matrix where it identifies a traditional bookkeeping term, and
> then
> if you follow the row and column, you can identify what the "equivalent"
> concept is in GNUcash.     I saw this a lot in proprietary software
> everywhere and it seems like nothing more than a way to control the users
> and keep them dependent on a unique way of doing something.   In the
> digital
> age, I don't think doing something old school should have to slow a
> workflow.  I prefer old school, old school is good,  it has proven again
> and
> again to me at least that it is always a system you can depend on and
> others
> can understand. If everyone uses a different methodology, no one will
> understand each other and business will be good for proprietary software
> makers.    If GNUcash does not use a journal as the point of entry, I don't
> want to invest the time in learning it.  For one thing, it looks like it is
> going to be very time consuming just to import my data because of this,
> which is essentially already in the form of a journal the way it is
> supposed
> to me.  All GNUcash needs to do is create or identify the account by
> looking
> at my spreadsheet, put the data in that account, then do the same for the
> other accounts in that transaction as indicated from my journal.  Seems
> simple.
> >
> >
> >
> > Thank you for your thoughts though as it helped me get up to speed much
> faster.    If you or anyone knows of another GNU bookkeeping package where
> I
> can use a journal as the point of entry and the software uses the
> traditional terms and methods most people would know from basic
> bookkeeping.
>
>
> As a non-accountant, I started to use a book-keeping program in the 90s
> without knowing anything about double-entry, because I'd started selling
> software in a small way, and needed to keep track of invoicing, while also
> managing my personal budgeting.
>
> I learned by trial and (a lot of) error, and eventually realised that I was
> going to have to learn about double-entry book-keeping. I bought an
> "old-school" book, and went through all the paper exercises, until I had
> sufficient knowledge and experience to stop me making (so many) errors.
>
> If I understand it correctly, what's called the General Ledger in GnuCash
> (GC)  is identical in function to the General Journal in a paper accounting
> system, except that it automatically posts the transactions to the
> appropriate accounts - a process you would have to do methodically by hand
> in a paper system.
>
> If you're insistent on using the General Journal method in a computerised
> book-keeping system, it's supported by the General Ledger in GC. The price
> you pay in doing it this way is that you have to specify at least two
> accounts for the distribution each time you make an entry. I find it more
> natural when entering a batch of transactions - for example from the
> counterfoils in my cheque-book or from a pile of credit card receipts - is
> to open the relevant source account and make the entries through that. The
> end result is the same, but the risk of operator error is reduced.
>
> Michael
>
>
> >
> >
> >
> >
> >
> > From: Buddha Buck [mailto:blaisepascal at gmail.com]
> > Sent: Wednesday, August 07, 2013 6:15 PM
> > To: cgw993 at aol.com
> > Cc: GnuCash Users List
> > Subject: Re: General Journal
> >
> >
> >
> > Books on basic bookkeeping also discuss "T-Accounts" too, but no one
> actually keeps books that way.  There are a lot of things taught in basic
> books which are useful and important for understanding the basic concepts
> than are actually used.
> >
> >
> >
> > The idea of the General Journal being the initial entry-point of all
> transactions is one of these things.  Even in traditional, manual
> double-entry bookkeeping the General Journal was just one of many journals
> typically used, in addition to sales journals, cash journals, etc.  Many
> actual journals have an implicit assumption that one account will always be
> involved in the transaction, and provide places to record the other
> account(s) involved (for instance, a "sales journal" might have columns for
> sale amount, sales tax, cash, check, credit, so that when the journal is
> transferred to the ledgers, the sales column corresponds to the appropriate
> income account, the sales tax column corresponds to the appropriate
> liability account, the other columns correspond to their respective asset
> accounts, etc).  In this setting, the "General Journal" proper is used only
> for transactions that can't easily be recorded in more specialized
> journals.
> >
> >
> >
> > That said, every DE-accounting package that I have been able to examine
> (or write) has, at it's core, the functional equivalent of a General
> Journal, in the form of a date-stamped collection of transactions, each of
> which must balance debits and credits.  Very few DE-accounting packages use
> the General Journal as a main data-entry method.  Why? Because it's
> inconvenient, and not how most people think.  Most people think in terms of
> specific workflows that look at one main account at a time -- like the
> non-general journals mentioned above.  The account registers in GnuCash act
> like specialized journals, one for each account.  You see a time-ordered
> list of transactions (journal entries) that involve that account.
> >
> >
> >
> > Note that this is different than what you see in a standard T-account
> ledger.  Usually, you don't see the rest of the transaction involved in a
> ledger-entry; you just see it's effect in the one ledger (ideally, there'd
> be an identifier to be able to look up the rest of the transaction in the
> journals, for auditing and error-correcting purposes).  In the GnuCash
> registers/journals, you see the other account(s) involved in the
> transaction
> as well.
> >
> >
> >
> > That said, under Tools->General Ledger, GnuCash provides a General
> Journal-style display and entry.  Every entry is displayed like a "split
> transaction", even if only two accounts are involved.  Furthermore,
> whenever
> you use the "split" button you effectively get a portion of the General
> Journal exposed in the current register (you can use a split entry to put
> stuff into any set of accounts, even excluding the account who's register
> you are currently using).
> >
> >
> >
> >
> >
> > On Wed, Aug 7, 2013 at 7:22 PM, <cgw993 at aol.com> wrote:
> >
> >
> >
> > Hi,
> >
> > I am new to GNU software in general and am a big supporter of the FSF
> ideas.
> > Gnucash looks like it will be very useful.   I have also recently decided
> to
> > learn the basics of bookkeeping as is taught in a textbook or by a
> > teacher instead of as is taught by quickbooks or some other proprietary
> software.
> >
> >
> >
> >
> >
> > Most people I would guess do not have a basic understanding of
> bookkeeping
> > principals or the accounting equation.   This is just my opinion but I
> > believe that you cannot keep books unless you have this basic
> understanding.
> > The software makers, to some extent this includes Gnucash, seem to try
> > to bypass bookkeeping fundamentals and to create their own system in
> > order to "simplify" the process for people that are not familiar with the
> basics of
> > bookkeeping.   I strongly believe this is not a good practice and that
> this
> > will cause more failures than successes in helping people to keep
> > their own books.  But I could be wrong, I did just after all learn
> > some basic things about bookkeeping recently.
> >
> >
> >
> >
> >
> > The very first thing that I was taught to do, and what I assume is
> > taught by most textbooks, is to become familiar with the concept of the
> General
> > Journal.    This is probably the most critical step in the entire
> > bookkeeping process.   It is during this step that the nature of the
> > transaction and the amounts involved first enter the bookkeeping system.
> > It is also at this step that the user can easily verify that the
> transaction
> > is balanced.     In order to become familiar with how to use the general
> > journal, one has to practice with transaction analysis problems.   An
> > example transaction analysis problem -
> >
> >
> >
> > You buy $73 of groceries with your checking account -
> >
> >
> >
> > Debit Account - Expense Groceries $73
> >
> > Credit Account - Checking $73
> >
> >
> >
> > What happens if instead you use a credit card to make the purchase?
> > What about if you used cash, spent $80, paid $73 for groceries and
> > tipped $7 to the person who helped carry the bags to the car?
> > Understanding how to enter this into the general journal is critical
> > and in fact all over steps pretty much take care of themselves after this
> point.
> >
> >
> >
> > Why in the world accounting software would want to bypass the General
> > Journal in some way.   Almost all software seems to intentionally do
> this.
> > The General Journal is the most important part of the bookkeeping
> process.
> > Why would you want to skip this step and go right to the General Ledger?
> > This is not how students are taught bookkeeping.  Going straight to
> > the general ledger seems like a guarantee that the books will never be
> > balanced and that the user will never really understand what money is
> > going where and how and why.
> >
> >
> >
> > Many people that switch to Gnucash have existing data they would like
> > to set up.  This can involve dozens of accounts and thousands of
> transactions.
> > For example I use excel and would like to instead use Gnucash.    I can
> save
> > the spreadsheet as a .csv file, but the problem with Gnucash is that I
> guess
> > I can only import one account at a time?   Why not let me specify right
> in
> > the spreadsheet the name of the account that transaction goes into?
> >
> >
> >
> > If Gnucash used a general journal as the point of entry into the sytem,
> it
> > seems like it would be easier for people to import their data.   Is there
> a
> > way around the problem of importing one account at a time?
> >
> > Thank You
> >
> >
> >
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