[GNC] Getting My Account To Trial Balance
David Cousens
davidcousens at bigpond.com
Sat Jul 28 04:02:53 EDT 2018
Hugh,
Gnucash will certainly do what you want and a number of us do use it
for exactly that purpose, amongst many other more complex purposes. We
are having a bit of a communication problem as some of us wrongly
concluded from your first post that you were using trading accounts
used for buying and selling shares/securities. Gnucash has a little bit
of its own jargon which takes a short time to pick up as well as the
general accounting jargon.
Gnucash is a double entry accounting system. This means that every
transaction affects at least two (or in some cases more, e.g with VAT)
accounts. The first is the account that funds are either coming out of
or being deposited to, e.g. a bank account and the second component is
usually an income or expense account which indicates where the funds
either came from or went to and the purpose.
The Tutorial and Concepts guide for Gnucash (https://www.gnucash.org/do
cs/v3/C/gnucash-guide/index.html) has a brief overview of this.
Wikipedia also has a good description of double entry accounting (https
://en.wikipedia.org/wiki/Double-entry_bookkeeping_system but is a lot
wordier).
Section II of the Tutorial guide should give you most of the
information you need even though it is described as Personal Finances.
You will not need the business functions unless you purchase on
credit/account from suppliers (receive goods and pay at the end of the
month) for example or extend credit (supply the goods and collect
payment at a later date) for your sales to purchasers.
Anything which appears in an Orphan or Imbalance account usually means
that one of the components of a transaction is incorrect and tyhe sum
of the debit and credits in the transaction is not zero as it should be
(in this context debits are assumed to be the negative of credits).
Gnucash uses this so such imbalances are easily detected because they
appear in these accounts. This is not sufficient to eliminate all
possible errors but it does identify some fairly common entry problems
If all transaction you have entered are balanced within the transaction
in all your accounts (and when there are no transactions to the Orphan
or Imbalance accounts), then the trial balance should also be balanced,
i.e. the sum of all debits should equal the sum of all credits. As I
mentioned in an earlier post, this is the starting point from which
accountants adjust the accounts (not fiddling the books) to produce the
final account statements and close the books for an accounting period.
If you start with the tutorial and setup a dummy set of accounts to
play with (it can be a copy of the file for your actual accounts in a
separate location) you can work through the tutorial as an exercise and
then go back to the real accounts when you feel you have understood it.
I still have a dummy set of accounts for testing things after 9 years
using GnuCash.
Hope this is clearer for you and please come back to the forum if any
of the above material is unclear for you or you have specific
questions. It may help to give a brief description of the event you are
trying to record in the accounts so there is a bit of context so we
don't go charging off into the wild blue yonder on the wrong track.
David Cousens
On Fri, 2018-07-27 at 19:49 +0100, H M MacDonald OBE wrote:
> We aren’t a business – we are a social club. Most of our income is
> derived
> from subscriptions or donations or ticket payments for our social
> functions.
> Our expenditure is on running costs like postage, stationery and
> hotel
> charges for meals and functions. The profit is the overall profit
> when the
> expenditure is deducted from the income. The software is fine for
> recording everything and for calculating the profit and loss but at
> the year
> end we will need to produce a balance sheet and that’s where the
> problem
> appears to come up. I’m really sorry if I’m wasting all your time –
> you’ve
> all been really helpful and maybe its just that gnucash won’t do what
> we
> expect.
>
> From: gnucash-user
> <gnucash-user-bounces+spahonsecobe=gmail.com at gnucash.org> on behalf
> of David
> Carlson <david.carlson.417 at gmail.com>
> Date: Friday, 27 July 2018 at 14:19
> To: Hugh MacDonald OBE <sassunachobe at gmail.com>
> Cc: Gnucash Users <gnucash-user at gnucash.org>, Stan Brown
> <the_stan_brown at fastmail.fm>
> Subject: Re: [GNC] Getting My Account To Trial Balance
>
> If you sold an asset that is valued in units other than your currency
> then
> read the chapter of the manual about capital gains about how to enter
> your
> profit.
>
> Otherwise tell us more about the transaction where that profit
> appeared.
>
> David C
>
> On Fri, Jul 27, 2018, 4:11 AM H M MacDonald OBE <sassunachobe at gmail.c
> om>
> wrote:
>
> > My accounts are showing a profit of £20.99 which shows as an
> > Imbalance of
> > £20.99. Sorry to be a bit slow on all of this but are folk saying
> > that the
> > £20.99 needs to be added to current assets/equity to make the
> > trial
> > balance?
> > I¹ve tried that and it still fails. It can¹t be added to the
> > income as a
> > profit since that will make the profit double. Clearly there¹s
> > something
> > I¹m still not getting ŠŠŠ
> >
> > Thanks to everyone for their input so far.
> >
> > From: gnucash-user
> > <gnucash-user-bounces+spahonsecobe=gmail.com at gnucash.org> on
> > behalf of
> > Stan
> > Brown <the_stan_brown at fastmail.fm>
> > Date: Thursday, 26 July 2018 at 13:21
> > To: GnuCash User List <gnucash-user at gnucash.org>
> > Subject: Re: [GNC] Getting My Account To Trial Balance
> >
> > David T. wrote:
> >
> > > > For those who *do* have such holdings, a balanced transaction
> > > will
> >
> > still fail
> > > > the trial balance if the gain or loss isn?t entered. In this
> > > instance,
> >
> > there
> > > > will be no entries in IMBALANCE-XXX, since each transaction
> > > balances.
> > > > Example: buy 10 shares of X for $100, using cash from your
> > > checking
> >
> > account
> > > > (credit/debit of $100). Then sell those shares for $150
> > > (debit/credit of
> > > > $150).
> > > > Both transaction balance?but where did that extra cash come
> > > from?
> >
> > Without
> > > > entering the gain of $50 as income, the Trial balance will
> > > fail.
> >
> > Is that really what happens? I can't understand why, if it does.
> > Yes, you
> > end up with an extra $50 in cash, and you also end up with MINUS
> > $50 in the
> > investment: the original debit of $100, and the sale credit of
> > $50, leaving
> > a credit (minus) balance of $50. As far as I can see, the trial
> > balance
> > still balances.
> >
> > Of course, a negative balance in an investment account should
> > raise a red
> > flag when (if) yo notice it: "Oops, I forgot to enter the gain as
> > a
> > transaction." But I don't see how it should make the trial balance
> > fail.
> >
> > BTW, instead of a separate transaction, I might record the gain as
> > a split:
> > Assets:Cash $150 debit
> > Assets:Investment $100 credit
> > Income:Gain on investments $50 credit
> >
> > Is there any disadvantage to doing that, versus two transactions?
> > Assets:Investment $50 debit
> > Income:Gain on Investments $50 credit
> > Assets:Cash $150 debit
> > Assets::Investment $150 credit
> >
> > --
> > Stan Brown
> > the_stan_brown at fastmail.fm
> > http://BrownMath.com
> > http://OakRoadSystems.com/
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