[GNC] To: GnuCash Documentation Team Re: Accounting Explanation Concept for GnuCash help file?

[David Cousens]

Hi Brian,

This the real application of the general accounting equation which is often
written in the form
Assets = Liabilities + Equity + (Income  - Expenses). Accounting students
usually have this drummed into them from lecture 1

If you rearrange it so there are no negative terms with assets on the left
hand side (LHS) then

Assets + Expenses = Liabilities + Equity + Income 

which is the same as the equation you have with the ,  then the accounts on
the LHS of the equal sign are known as debit balance accounts and those on
the RHS as credit balance accounts. 

Debits increase the balance of the debit balance accounts (LHS) and credits
decrease the balance.
Credits increase the balance of the credit balance accounts (RHS) and debits
increase the balance.

I have been meaning to add this to the explanantion in the Help manual for
some time to clarify it.  It is almost in there but not quite.  In modern
accounting practice I have never seen draws on equity referred to as a
separate class of accounts as they are a class of transactions reducing the
balance of the accounts.


David Cousens





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David Cousens
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