setting up mortgage liability and paying it off from a check account asset...

[Buddha Buck]

On Thu, Jan 12, 2017 at 7:32 PM Morgan Read <mstuff at read.org.nz> wrote

> Simply being able to toggle through the 'Reverse Balanced accounts'
> options gives a clearer idea of what's going on.  However, I'm left in a
> quandary why, when I remove all reverse signing, Income accounts go
> negative - is that because the income source which those accounts
> represent are less that amount because my checking account is plus that
> amount?  Perhaps I've answered that myself...
>

In most cases, I would tend to feel that income accounts showing negative
balances indicates that there is something wrong. Setting to "traditional
accounting labels" can help, because increases to income should show up as
"credit", while decreases should show up as "debit".  I would expect income
accounts, like liability and equity accounts, to normally have "credit"
balances, while asset and expense accounts to normally have "debit"
balances.

I just tried toggling the "Reverse Balanced accounts" options myself.  This
suggests (and looking at my gnucash xml file corroborates) that GnuCash
internally treats debits as positive and credits as negative. So after
setting "reverse balanced accounts" to none, I get positive (debit)
balances in assets, and negative (credit) balances in liabilities. This
also indicates I've received a total negative salary, etc.

Setting "Reverse Balanced accounts" to "credit accounts" does what
traditional bookkeepers would do: treat asset and expense accounts as
positive if they have a net debit balance, and treat liability, equity, and
income accounts as positive if they have a net credit balance. In my
account summary, I see a positive bank account, a positive salary, as well
as positive expenses and liabilities. The only negative I see is equity.


>
> But also, what does it mean to be showing negative Equity - which is
> made up of Opening Balances only - when the opening value of the House
> under Fixed Assets is a third as much again in the black?  I realise
> that taking the Opening Balance of the 'Fixed Assets:House' from Opening
> Balances means that's so, but the resulting Equity doesn't equate with
> my understanding of equity, the difference between Assets and
> Liabilities...?
>

In your case, negative equity probably means that your equity account has a
credit balance -- which is good. Equity with a credit balance means that
your net worth is positive, even if (without sign reversal) it shows up red.

In my case, it means I owe more on my student loans than I own. This is not
so good ;-).


> And, finally - due to taking cash from the bank and importing a bank
> download, but not importing a similar 'Cash in Wallet' download of all
> my cash expenses, should I just waste the difference between what has
> been credited to 'Cash in Wallet' and what is actually in my wallet into
> 'Expenses Miscellaneous'?
>

Personally, I don't use the import-a-bank-statement feature, as that
reduces the effectiveness of a reconciliation -- the comparison of the
bank's records against mine. If I'm relying on the bank's records to
generate mine, how can I verify that they are accurate?

But I'm not sure what is happening here: Are you showing two bank-to-wallet
transactions instead of one, so the wallet total doesn't measure up? If so,
then delete the extra, incorrect transaction.

Or are you spending cash out of your wallet that you have no record of? If
so, Expenses Miscellaneous is probably a good place for it to go.


>
> Many thanks again.
>
> Regards
> --
> Morgan Read
> United Kingdom
> <mailto:mstuffATreadDOTorgDOTnz>
>
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