Budget reports show current income as negative value

[marcin]

Adrien Monteleone wrote
> Marcin,
> 
> One of the hardest things for people to grasp when first learning
> double-entry accounting is which types of accounts are increased or
> decreased by debits and credits. Part of this struggle has to do with how
> they have heard the terminology used from the perspective of someone
> else’s books, namely banks and credit card companies. This is because from
> the perspective of the other side of the transaction, the entries ARE
> reversed. Try not to think of how your bank or credit card company refers
> to transactions with this terminology and focus just on your books. You
> can determine which accounts should be affected in which way by looking at
> the accounting equation:
> 
> Assets = Liabilities + Equity
> 
> The expanded equation:
> 
> Assets = Liabilities + Equity + (Income - Expenses)
> 
> Technically, Income & Expenses are temporary equity accounts, which with
> paper books are closed out periodically to Equity, but the math works out
> if you list them like so. Everything on the left side of the equation will
> be increased if you debit the account. Everything on the right will
> increase if you credit the account, the exception being the Expenses
> accounts because they have a negative sign already in front of them, they
> are a "contra-equity” account, and so their sign is reversed, thus to
> increase an expense would be the reverse of a normal right-side account,
> you would debit, not credit it.
> 
> If I were to re-write the equation showing debits and credits it would
> look like this:
> 
> Assets(debit) = Liabilities(credit) + Equity(credit) + [Income(credit) -
> Expenses(debit)]
> 
> Every transaction must keep this equation in balance. Debit = Credit. Thus
> you must have both a debit and a credit for every transaction. Generally,
> when you receive money, you will be debiting an asset (increasing it) and
> crediting an income account (increasing it as well). Because the debits
> and credits are equal and are on opposite sides of the equation, the
> equation is still balanced and true.
> 
> Generally, when you spend money, you credit an asset (decrease it) and
> debit an expense account (increase it). While that doesn’t sound right,
> remember you are really increasing a contra-equity account, thus you are
> decreasing equity, so it all works out. A negative debit, the reverse of a
> debit, IS a credit, that is why to increase expenses, you debit them
> because their sign is already reversed.
> 
> -------------
> 
> Now, with that out of the way, let’s tackle your balance sign issues one
> step at a time.
> 
> First, open your income account register. (or one of the sub-accounts if
> you have created more than one)
> 
> Second, in the View menu, click “Transaction Journal.” This will show all
> splits for all transactions. I use this view at all times so nothing is
> hidden from me. If you’d like to do the same, you can set that under
> Preferences > Register Defaults > Default Style.
> 
> Now, look at your transactions in the income register you opened. Each one
> should have at least two splits, one being a debit to an asset account,
> say checking, and the other being a credit to the income account you have
> open. Here’s a simple example:
> 
> Account					Debit	Credit
> Assets:Current Assets:Checking		450.00
> Income:Salary					450.00
> 
> If the spacing doesn’t translate correctly for you in my e-mail reply,
> note that debits are the first column in GnuCash and credits are the
> second.
> 
> If that looks correct, we can proceed. If not, and the values for the
> Income account are in the first column in the GnuCash register, then your
> transactions are entered backwards and need to be fixed.
> 
> Do this for all income accounts you have created.
> 
> Let us know what you find and we can then proceed to the next step.
> 
> Regards,
> 
> Adrien
> 
> 
>> On Apr 7, 2017, at 10:03 AM, 

> gnucash-user-request@

>  wrote:
>> 
>> ------------------------------
>> 
>> Message: 9
>> Date: Fri, 07 Apr 2017 08:12:23 -0400
>> From: Mike or Penny Novack <

> stepbystepfarm@

> >
>> To: 

> gnucash-user@

>> Subject: Re: Budget reports show current income as negative value
>> Message-ID: <

> 58E78227.7080109@

>>
>> Content-Type: text/plain; charset=ISO-8859-1; format=flowed
>> 
>> On 4/6/2017 7:27 PM, marcin wrote:
>>> Adrien,
>>> 
>>> Thank you for your meticulous approach........ I could even make my
>>> budget report graphs showing positive value for a new (test) income. But
>>> to
>>> get that result I had to make my income as spending and reduce my
>>> balance in
>>> account registry.
>>> 
>>> I also realised that when entering income into bank account registry it
>>> also
>>> comes up as income in my income account (category). I think it should be
>>> debit not an income (If money goes from income account (category) to my
>>> bank
>>> account registry).
>>> 
>>> It seems to be very confusing. I think this is a bug.
>>> 
>> No, almost certainly that you are new to double entry bookkeeping and 
>> having trouble with the fundamental concepts. For example:
>> 
>> You receive a paycheck which you deposit into your bank account:
>>    That would be a debit to your bank account and a credit to your 
>> income account and BOTH of those are increases to those accounts because 
>> for an account of type asset, debit is an increase, while for an account 
>> of type income, credit is an increase. The net effect on your books 
>> (total debits vs total credits) is zero as it should be.
>> 
>> Is that understood or not understood? We have to be clear about THAT 
>> before we can discuss whether some behavior you observe is a bug.
>> 
>> Michael D Novack
> 
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By the way. I use exactly the same way to enter my income.



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