how to automatically update equity account as each transaction is entered?

[DaveC49]

Hi Francis,

I don't think accounting is irrational. As a device purely created by us to
handle another creation of ours ( money and finances) the GAAP is a highly
rational system, it just has no immutable laws of nature that we can appeal
to constrain  the practice  ( I am both a physicist and an accountant so I
have a foot in both camps there).  I am not so sure that one can think ones
way through science. Aristotle tried that and held up the progress of
science for a considerable period before it became apparent some of his
thinking was highly flawed.

There are probably many ways in practice that you can achieve the same
result as the double entry accounting system that Gnucash implements. My
feeling is that it has become the standard in accounting practice because it
implements various checks on the accuracy and consistency of the recorded
data which were present in manual ledger recording of financial data that
make errors in data entry easier to locate. Gnucash has a number of features
which improve on the basic double entry system.  Your $1 debit to the Asset
account if an income or other account had not been selected would have
appeared in a default account Imbalance created by Gnucash. Any non zero
balance in this account likely indicates an incorrect entry and the source
of that entry can be traced form the Imbalance account.

That is not to say it cannot be improved, but any improvements in double
entry accounting will be incremental and at least for business non-profit 
and government organisational use the creation of the IASB has possibly made
any improvement process a bit cumbersome. Against that, we should be able to
easily understand and interpret any set of accounts which are maintained in
accordance with IASB standards from anywhere in the world at a basic level
(at least in principle).

In a way what you have asked for does happen (although not automatically)
but to get the current  net worth  you have to take the Equity balances at
the last closure and add the current Profit ( Income to date minus the
Expenses to date).  It is likely that you could customize one of the
standard reports to do just that by combining the Equity portion of  a
Balance report with a Profit and Loss Report.  

It is almost impossible to automate the selection of the account for the
second half of a  transaction in general though, as it depends upon the
nature of the specific transaction ( credit notes and similar are exceptions
from simple purchase expenditure transaction)  that is being recorded and
most people want to break down their income  and expenses into specific
categories and Gnucash has no way of knowing what level of detail is
important to a specific user. The business features do address this to some
extent for specific types of transactions.

I find the flexibility of Gnucash its most important feature. If the
treatment of a specific transaction type is not specifically implemented,
you can create the necessary transaction components to achieve it as long as
you know what you are doing in the accounting sense. The business features
of Gnucash have developed appreciably in the time I have been using Gnucash
I think mainly as a result of Derek's efforts.



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