How should I enter values on a budget in gnucash ?

Wed Mar 8 03:30:25 EST 2017

Hello Geert, David T., Everyone,

I had a chance to spend a few minutes with the budget module, to try to
make sense of the signs.

First, Here's what I expect: With Edit -> Preferences -> Accounts ->
Reverse Balanced accounts set to "None", I would expect positive values in
the budget to correspond to debits. With Edit -> Preferences -> Accounts ->
Reverse Balanced accounts set to "Credit accounts", I would expect positive
values in Assets and Expenses to correspond to debits, and positive values
in Equity, Income, and Liabilities to correspond to credits.

What actually happens: The budget module appears to be insensitive to the
Reversed Balanced accounts setting. However, its operation does correspond
to "reverse credit accounts"; to be specific, positive amounts entered into
Assets or Expenses correspond to debits, and positive values in Income or
Liabilities correspond to credits.

(See attached screen shot, in which (for the first six months of the budget
I chose a pair of account types and entered +100 into the corresponding
spaces in the budget. You can see that +100 corresponds to a debit for
debit accounts and a credit for credit accounts.)

To answer Geert's original question, to pay down a debt using an asset you
would enter -100 in the asset account (credit the asset) and -100 in the
liability account (debit the liability). That is how the budget module
would represent that transaction, and how folks using the "reverse credit
accounts" feature would understand it to be.

For those who prefer setting "Reverse Balanced accounts" to "None", Geert's
suggestion of representing the transaction by -100 to assets and +100 to
liabilities would be correct. But those people would be in the minority I
suppose.

What is still wrong with the budget module:

1) The module should be sensitive to the setting of "Reverse balanced
accounts". It currently does not seem to be, that I could tell.

2) The "Transfers" summary line shows the net effect of budgeting amounts
to assets and liabilities. However, the transfers line is like a debit
account, which causes the sign to switch in a disconcerting way when
liabilities are budgeted. (See months 5 and 6, i.e., July and August, in
the screenshot.) I suggest breaking the Transfers line apart into Assets
and Liabilities, or, at least, showing the formula by which it is computed
in the row title (i.e., "Transfers (Transfers to Assets - Transfers from
Liabilities)" (that is, if "reverse credit accounts" is in effect)).

However, there's no reason to assume that an entry of type "Transfers"
would be like a debit account, so instead I suggest it would be better to
get rid of the "Transfers" summary line altogether and instead include
separate lines for "Transfers to Assets" and "Transfers from Liabilities".

(To compound the issue, the Total line seems to be a credit account, of
type Equity perhaps, which can cause a sign to bounce twice as we follow it
through. +100 in Liabilities becomes -100 in the Transfers summary line
which becomes +100 in the Total summary line.)

3) The Total row title should include the formula by which it is
calculated, i.e., (when "reverse credit accounts" is in effect) the row
title should be "Total (Income - Expenses - Transfers to Assets + Transfers
from Liabilities)".

4) Since the use of negative signs in Liabilities is confusing to many
people, this all should be carefully documented somewhere.

5) Note there is something odd happening in the last four months of my
artificial budget when I involve "Equity". I think this means that we
should think about the Total row in the budget as a credit account of type
Equity, so transfers to/from Equity have no effect on the Total. Still, it
seems kind of odd. I would suggest including Equity in the summary rows at
the bottom (Transfers from Equity) and in the Total, which would then be
"Total (Income - Expenses - Transfers to Assets + Transfers from
Liabilities + Transfers from Equity)".

6) There seem to be some other problems with the budget module that not
everyone has. The budget module eats up a lot of compute cycles on my
Windows machine, making it very slow to respond to typing, but not on my
Mac. And I have trouble with one of my credit cards not being rolled up
into the total Liabilities correctly. I'll have to spend some more time
tracking those problems down.

7) I haven't begun to address the budget reports, but the budget balance
sheet does seem to be wrong, as Larry and others have noted.

Edward

On 1 March 2017 at 06:10, David T. via gnucash-user <
gnucash-user at gnucash.org> wrote:

>
> > On Mar 1, 2017, at 3:30 PM, Geert Janssens <geert.gnucash at kobaltwit.be>
> wrote:
> >
> > Background of my question: recently someone proposed a fix for the
> gnucash
> > budget balance sheet report [1] because it was showing incorrect values
> > (according to the poster).
> >
> > As budgetting is an area of gnucash I'm not at all familiar with all, I'm
> > having trouble estimating whether the patch submitter really did
> discover a
> > bug and the fix is valid, or whether he is using the budget feature
> > incorrectly.
> >
> > My question is simply this:
> > I want to budget a repayment of a credit card (from my bank account).
> >
> > How should I enter this in a budget:
> > Bank: 100.00-
> > Credit card: 100.00-
> >
> > Or
> > Bank: 100.00-
> > Credit card: 100.00(+)
> >
> > I would expect the latter as I think transactions need to balance.
> However the
> > other person expects the former.
> >
> > I've read the gnucash documentation which is unfortunately not showing
> any
> > example or detail in this regard.
> >
> > In addition there's an outstanding bug report [2] with the exact same
> request,
> > so answering this here, would solve two problems at once :)
> >
> > Thanks,
> >
> > Geert
> >
> >
> > [1] https://github.com/Gnucash/gnucash/pull/120
> > [2] https://bugzilla.gnome.org/show_bug.cgi?id=689754
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>
> Geert,
>
> I’ll begin by saying I may misunderstand the original problem, but when I
> look at the Budget Balance report, I frankly think that it is screwed up in
> more significant ways than how it represents liabilities.
>
> As to the original problem, I think there is a disconnect between how the
> budget features operate, and how the rest of the application operates,
> which the bug hints at. In reference to the comments on the pull request, I
> turned off Preferences->Reverse Signs, and looked at the results of both
> the CoA and Budget info. What I noticed: the Budget values *don’t* change
> with the preference, but the report and the CoA *do* change. In other
> words, if I change the preference to reverse Income & Expense accounts, the
> CoA reflects this (i.e, they both display as positive values), but the
> values in the budget seemingly remain as originally calculated, with
> negative values. I am not clear on what exactly is happening, because the
> report seems to still work, even though the budget numbers retain their
> original values. If I recalculate the budget numbers, however, they take on
> (and keep) the current signs. The report continues to behave consistently,
> regardless of the sign displayed in the budget. So, it is not clear whether
> one should enter a negative value (reduce the liability by entering a
> negative number in the budget) or a positive one.
>
> So, it seems to me that it is perhaps very understandable that a user
> would receive confusing results. It is not clear to me what the resolution
> is, except to say that the current situation is highly confusing.
>
> Be all that as it may, the report itself is fundamentally troubling for
> me. For starters, which accounts is it including, and for what purpose?
> When I run this report, I get a listing of every account in my
> file—regardless of whether accounts are hidden, empty, zero balance, or
> part of the budget. It would seem to me that the Budget Balance Sheet would
> only include accounts that the user has designated in the underlying
> budget. This is not helped by the fact that the options to exclude zero
> balance/zero value accounts doesn’t seem to work.
>
> Next, it is very difficult to determine that this report apparently is
> tallying up the numbers from the budget entries. At least, based on the
> liability account that I was using to examine this bug’s behavior, that’s
> what it seems to do. I don’t know for sure, however, because none of the
> other numbers seem to match from the budget the the report. Confusing the
> matter is the fact that values turn up for accounts without budget
> numbers—in my case, the report includes commodity holdings info, even
> though they are not part of the budget. So, it is anyone’s guess what the
> report actually includes.
>
> David
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-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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