[GNC] Need help with a Savings account

[Adrien Monteleone]

As Dale mentioned in another reply, money moves from credit to debit.

Do not think of the money as moving from you to the bank.

Think of the money as moving from one (or more) of your accounts to another one (or more) of your accounts.

Everything is done within and from the perspective of *your* books, not someone else’s. (sorry if my other reply confused you on that point)

When the *bank* says they are ‘crediting’ or ‘debiting’ your account, that is from *their* perspective in *their* books. From your perspective, in your books, you would enter that same transaction as a debit in that account. So when the bank says they are ‘crediting’ your account, thus increasing its value, that means their liability to you is increasing, because your account with them is not an asset account, it is a liability account. (opposite side of the accounting equation from their perspective) When they say they are ‘debiting’ your account, thus decreasing its value, that means they owe you less, they’re decreasing their liability. But while the effect in your books is the same (increase or decrease) the side of the ledger you record it on is the opposite (debit or credit).


Let’s say yesterday, you started with $800 in your savings account and you had $350 on hand in cash...



===================================
ToddAndMargo Balance Sheet (partial)
as of April 14, 2019

Assets
	Cash	$ 350
	Savings	$ 800
		-----
Total Assets	$1150
===================================



Now, today, you move $100 from Cash (credit) to Savings (debit)

Date		Memo			Debit	Credit
-----		-----			-----	------
4/15/19		Assets:Savings		$100
		Assets:Cash			$100


When written Journal style it would look like this:

4/15/19
Dr. Assets:Savings			$100
	Cr. Assets:Cash				$100

I indented the amounts as well, but they might not always appear that way in textbooks and references. The distinguishing feature is the ‘Dr.’ and ‘Cr.’ prefixes to denote which is which.

(for some reason, convention has it to always show debits first, and usually to indent all credits, but you can enter them as credits first if you like, though GnuCash will likely re-order them to debits first upon saving.)



===================================
ToddAndMargo Balance Sheet (partial)

Assets
	Cash	$ 250
	Savings	$ 900
		-----
Total Assets	$1150
===================================



As you can see, your total assets did not change. Your books remain in balance. Money did not appear or disappear, it moved from one area where you held it to another area where you held it. (it is still your asset) I didn’t need to show the Liabilities or Equities section of the Balance Sheet because they did not change and were not affected. (and we don’t even know or care about them for this example)

From your perspective, the increase in your savings account *came from* your cash on hand.

Now, let’s look at the Bank’s books for the exact same transaction:



===================================
'First Bank' Balance Sheet (partial)
as of April 14, 2019

Assets
	Cash		$ 800
			-----
Total Assets		$ 800

Liabilities
   ToddAndMargo		$ 800
			-----
Total Liabilities	$ 800
===================================



So ‘First Bank’ as of close of business yesterday, has $800 cash on hand, and they owe it all to ToddAndMargo. (sweet!)

This is how that *same* transaction above from your books, looks in theirs:

Date		Memo					Debit	Credit
-----		-----					-----	------
4/15/19		Assets:Cash				$100
		Liabilities:ToddAndMargo			$100


Or, Journal Style:

4/15/19
Dr. Assets:Cash						$100
	Cr. Liabilities:ToddAndMargo				$100

As you can see, *your* savings account with them is a liability, and the entries for it are on the opposite side of the ledger from your books.



===================================
'First Bank' Balance Sheet (partial)
as of April 15, 2019

Assets
	Cash		$ 900
			-----
Total Assets		$ 900

Liabilities
   ToddAndMargo		$ 900
			-----
Total Liabilities	$ 900
===================================

Now, at the end of today, First Bank now has $900 on hand, and they still owe all of it to ToddAndMargo, while their assets increased, so did their liabilities. Their books still are in balance.

From their perspective, their increase in cash on hand, *came from* their liability (debt) to you.



---

On two other notes, thanks, but I’m not and never have been a teacher, though I used to be a restaurant trainer in a distant life.

And yes, I’m a fan of Mr. Clemens as well.

Regards,
Adrien

p.s.—at this point, you’re starting to delve in to accounting questions. I’ll be happy to help with basics, but if you are interested further, I highly recommend finding an online resource. There are plenty of them on the web that are easy to find. Some are more beginner friendly than others of course.

> On Apr 15, 2019, at 6:31 PM, ToddAndMargo via gnucash-user <gnucash-user at gnucash.org> wrote:
> 
> On 4/15/19 4:10 PM, Adrien Monteleone wrote:
>> What makes you think ‘losing money’ = ‘debit'?
> 
> Hi Adrian,
> 
> By "losing money", I meant money moving away from me.
> From me (debit) to the bank
> 
> By the way, I am a bit disturbed with myself that I actually
> understood your reply.
> 
> By chance do you have a teaching background?  It is a skill
> all in its own and you are very good at it.
> 
> And now a word from the funniest man to ever have walked the face
> of this earth:
> 
> 
>    “He who asks is a fool for five minutes, but he who does
>    not ask remains a fool forever.”
>       ― Mark Twain
> 
> Okay, maybe 10 minutes.
> 
> :-)
> 
> -T
> 
>     Of all the things I've lost, I miss my mind the most
>     --Mark Twain