General Journal

[cgw993 at aol.com]

Derek,
Thanks for your thoughts, I agree with most but not all of your points.  I have been getting a lot of heat from some of the users on this list about this subject so I will just leave it at that.   I look forward to your posts on other subjects.







-----Original Message-----
From: Derek Atkins [mailto:warlord at MIT.EDU] 
Sent: Friday, August 09, 2013 11:19 AM
To: cgw993 at aol.com
Cc: 'David T.'; 'Buddha Buck'; 'GnuCash Users List'
Subject: Re: General Journal

<cgw993 at aol.com> writes:

> On the import field, they don’t call them debits and credits, they 
> call them deposits and withdrawals unless I missed something.  Does 
> debit = deposit, and credit=withdrawal?

In the case of a Bank Account (or other Asset), yes, a debit == deposit == increase in the account (and a credit == withdrawal == decrease).

You may be surprised to learn that most people don't really understand debits and credits, and indeed most who think they do get it wrong.
Most people learn the terms from their monthly bank statements, and those are "backwards" (they are from the Bank's view of your account, which is a Liability to them).  Indeed, it took me YEARS to unlearn that misunderstanding.  So yes, "Deposit" and "Withdrawal" are much more useful to the average person.

As already mentioned in a previous email, if you want to use Debit and Credit you can set the preferences to do so via Edit -> Preferences -> Accounts and select "Use formal accounting labels".

As for the Ledger vs Journal discussion, the whole ledger/journal dichotomy only makes sense in the pen&ink old-school method.  When everything was pen&ink you didn't have time to push everything into all your different accounts in real-time, so you just recorded the transactions as they occur and then later you post them to the relevant accounts.

While it's useful to understand WHY it was done that way historically, it makes no sense to do it that way when using a computer program.  The reason it makes no sense is that when you enter a transaction it can automatically get posted to all the ledgers and journals necessary, immediately, in a single step, regardless of where in the program the transaction was entered.  There's no reason to delay the posting until the end of the day, or to force the user to make the migration manually.
That's the power of computers, reducing that workload.  So you can enter the transaction from any account register and supply all the debits and credits, or you can enter it from what GnuCash called the General Ledger (although technically it's possibly a misnomer and should be called the General Journal), or you can enter it from the "Transfer Dialog"..
Whichever floats your boat.

I hope this helps,

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-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available