bank entries

DaveC49 davidcousens at bigpond.com
Mon Nov 27 23:52:48 EST 2017


Christine,

I don't think the program itself is your problem. You will require some
fundamental knowledge of accounting procedures and theory no matter which
program you use. It is also a process of learning the jargonused in a
particular program's interface. I know of no accounting program which is not
a double entry under the hood although some do simplify procedures by only
allowing you to perform certain actions from the  appropriate accounts.
Gnucash is generally far more flexible that most accounting packages - but
it's default ways of doing things are designed to make it easier

Using the Dr and Cr terminology is good. It is the default for accountants.
Gnucash provides an alternative for people who are not comfortable with it.
That may be setup as the default if you are not getting Debit and Credit
column headings at the right when you display an account. Is so, to set up
Gnucash to use Dr/Cr go to Menu->Edit->Preferences then select the Accounts
tab at the left hand side in the popup dialog which comes up. About half way
down you will see a check box Labels - Use formal accounting labels. make
sure it is selected. You will then get Dr (Debit) and Cr (Credit) columns
when you display an account from the main Accounts window in a tab.

For a start, I would create a dummy set of accounts ( I call mine Test - no
imagination) you can play with while getting used to the program (I am an
accountant and I still use this regularly after using Gnucash for more than
five years) separate from any sets of personal accounts for yourself or
business set 
 of accounts. I usually put each set of accounts in its own folder.  Section
2.5 of the guide explains creating files for each set of accounts.

I would read  through sections 2.1, 2.2 and 2.3 of the Tutorial guide before
attempting too much but have the program open, particularly for section 2.3
which deals with the interface - how you do things in Gnucash.  Section 3 on
Accounts next and then Section 4 on Transactions are good to read next.

>From your description, it would appear you are handling a simple business.
If you buy and sell only with cash, then you can ignore the business
features section for now as they are mainly for buying from suppliers on
credit (when you pay at the end of the month or quarter) and selling to
customers on credit ( where they pay you later on some agreed basis (again
ned of month/quarter etc). Even if you do need to use these, it is better to
get a good grasp on the cash processes first.

Debits and Credits as they appear in your own account will be reversed from
how they appear in a bank statement for your account from your bank. This is
because a bank views your account with it as a Liability (money they may
have to pay to you or to others on your behalf when you request it). In your
own accounts your bank account is an Asset (a resource you have available to
use at your discretion).

I am also not sure what you mean by "balance one of the accounts". The
column labelled Balance on the far right in a given account register gives
the balance of that account which for an Asset account, e.g. a bank account
is the sum of all the debits to that account minus the sum of all the
credits to that account. Gnucash maintains the balance for that account
automatically. There is no having to balance an account when you enter a
transaction. Another good rule of thumb is if you are buying or selling
something where the funds either come or go to your bank account, then start
the transaction in the account register for your bank account (double click
on the Asset:Bank account in your Accounts display tab and it will open the
register).  Changing the register defaults can also make things a lot
clearer.  Menu->Edit->Preferences and then select the Register Defaults tab.
If you set the Default Style to Autosplit Register (select the checkbox) and
the Other Defaults check the Double line mode checkbox. You will then have
to close any open account registers and reopen them for these options to
take effect. It will then appear as follows:
<http://gnucash.1415818.n4.nabble.com/file/t375329/Screenshot_from_2017-11-28_14-24-08.png>
. 

The first two lines are an unopened transaction, the next 5 lines are the
currently open transaction and the final two are another unopened
transaction. The two yellow lines are a summary of the transaction as it
affects the account register in which it is displayed. The three lines in
brown are the components or splits of the transaction - the third line is a
blank. The screenshot is from the reister for one of my bank accounts
Assets:Current Assets:David:Streamline 2576 ( each of the : separated items
is a sub account of the previous level). Gnucash always presents the debit
entries of a transaction first followed by the credit entries when you open
a transaction in the register. The second brown line (Credit entry) records
money being taken from my account. The first brown line (Debit entry)
records that money being transferred to my Paypal account to purchase an
item using my Paypal account. (Normally when you enter a transaction you
would enter what appears in the second line first and then what appears as
the first line as the second line. 

If you click on the account column (fifth from the right in the screenshot)
in one of the splits (brown lines), you will get a dropdown menu which will
allow you to select any account you want to from your account heirarchy. If
this had been a direct purchase, instead of via Paypal, I would have
selected an Expense account rather than my Paypal account. 

My Paypal account register will have this same transaction recorded with the
exact same detail as well as another transaction between it and an expense
account which records the actual purchase I made from a supplier

You may also have meant the process of reconciliation by "balance one of the
accounts". This is where you compare what you have recorded in your account
with an external record, e.g. a statement supplied by a bank periodically
usually monthly or quarterly.   This is discussed in Section II,1. Checkbook
under the reconciliation heading.

Hope this helps to make it a little clearer. It's usually like mud for a
while then it begins to make sense.

Cheers

David.



-----
David Cousens
--
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