Owner's Draw setup under Equity group

[Adrien Monteleone]

Thanks Michael,

Yes I misunderstood the original question a bit.

Certainly, it should operate the way Dave C describes. And from the response of the OP, I think it is working as it should:

> Hello, Adrien:
> 
>     Thank you for the response:

>     What I have done so far is to create an account under Parent "Equity",
> and titled it Owner's Draw. When I did a sample $50 transfer from
> Business Savings to this account, the results were mixed:
> 
> 1) Savings was decreased (good)
> 2) Equity itself was decreased (good)
> 3) Owner's Draw showed up as negative in red (good or bad?)
> 
>     Bookkeeping texts I have read state that Owner's Draw should
> be of a type "contra equity" which I take to be a reversed type.
> In other words, deposits to it should be positive (?) even 
> though it is a withdrawal from Assets. Since I am accumulating
> funds to be spent for personal use (hence no longer 
> Business-available), should this still be listed in GNUCASH as red?
> 
>     Ideally, it seems to me that I should be able to
> access the Draw account's "Properties" (or similar
> attribute), and declare it to "contra". So far,
> no text on GNUCASH that I have seen describes
> if/how this could be done.
> 
>     That is why I am uncertain if I am doing this
> right. It seems that the Draw account should be listed
> in black since it is money now available for spending. If I 
> cannot figure out what else to do, I suppose that I could just 
> keep transferring from Assets to Draw for the next fiscal year,
> and watch the red amount grow as I spend for personal use.
> 
>     One good thing is that the GNUCASH
> Imbalance item is still 0.00. At least I am not
> dealing with "how to correct that". :-)
> 
> Brian

However, I think some confusion might be in play here with a lack of separation of concerns. If these are books for the business, then the money taken out of equity due to Owner’s Draw should not be ‘available for spending’ BY the business and so I think is correctly shown as a decrease in Owner’s Equity. If this is a consolidated set of books with no separation between the business and the owner, I don’t see a point of the Owner’s Draw account.

Brian, please be sure to reply to the group in the future so everyone benefits from the discussion.

-Adrien


> From: Mike or Penny Novack <stepbystepfarm at dialup4less.com>
> Subject: Re: Owner's Draw setup under Equity group
> Date: March 13, 2017 at 9:17:38 AM CDT
> To: gnucash-user at gnucash.org
> Reply-To: stepbystepfarm at dialup4less.com
> 
> 
> On 3/13/2017 5:13 AM, DaveC49 wrote:
>> Adrien,
>> 
>> I'm not sure I would agree with the statement that an Equity:Owner's draw is
>> a temporay account.
>> 
> I suspect that Adrien was not referring to the "owner's draw" under equity but an account used for the other side of that transaction. You or I would probably have called it something else (like "net gain" or "net loss") in the old days of pen and ink on paper accounting for the temporary income or expense account to bring the (paper) P&L account to net zero.
> 
> Michael D Novack
> 
> 
> 
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