beginning balance of income and expense accounts

[Adrien Monteleone]

How do you have an opening balance for income or expenses at the beginning of the year? You haven’t earned or spent anything yet.

You should be starting off with opening balances for assets and liabilities. Then as you earn and spend, the net of those newer entries are virtually calculated as ‘retained earnings/losses’ unless or until you close the books with an official entry to equity. (which is neither necessary, or necessarily desirable in Gnucash)

Income should be balanced with debits to an asset(where the money went to), not equity.
Expenses should be balanced with credits to an asset(where the money came from), not equity.

Regards,
Adrien

> On Mar 24, 2018, at 3:09 PM, Lori Norden <lnorden at mchsi.com> wrote:
> 
> I am starting Gnucash in the beginning of the year.  As I’m entering the beginning balance for each income and expense account, a transfer is being made to my Equity Opening Balance account.
> 
> For income beginning balance entries – credits income; debits Equity Opening Balance
> For expense beginning balance entries – debits expense, credits Equity Opening Balance
> 
> The problem is my Equity is reduced by the amount of net income I made as of the beginning date, but should be increased.
> 
> Should I be offsetting the beginning balances for income and expense to something other than Equity Opening Balance?  That’s what I thought the instructions indicated I should do.
> 
> Thanks for your help
> 
> Sent from Mail for Windows 10
> 
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