[GNC] How should I enter values on a budget in gnucash ?

[Jim Passmore]

TL;DR--Summary lines are good, but poorly named.  keep them.

Regarding the summary lines, as already said Income and Expense totals are
self-explanatory.  I'll try to explain a use-case for the other lines.

First of all, let's ignore the "transfers" part for a bit.  When I do a
budget, I'm concerned about inflows and outflows, and I do it all with
respect to my operating account (a personal checking account).  In spite of
the double-entry approach to accounting, I don't fill in expected entries
to the operating account--just the budgeted income and expenses.  Then you
can look at the totals to determine if your expected income will cover your
expenses and make decisions to adjust the budget (or at least maybe you're
willing for the account balance to decrease by the expense overage for that
budget period).  Having a "Total" of Income-Expenses does the math for you,
and helps you determine how much more you can plan to spend, or how much
more income you need, etc.

So now let's consider the "Transfers" line.  If I want to budget some cash
to go into a savings account, I would enter the transfer amount into the
Asset account, and the end result to my operating account balance is
exactly the same as an expense--the balance goes down.  Same thing applies
to paying down a liability--it's not an Expense in the strict accounting
sense, but it's an outflow from the operating account.  After you collect
these, treating them the same as expenses in the "Total" line (i.e.,
subtracting them, currently) is appropriate.

I have no idea on a use-case for budgeting changes to equity.

As for the names "Total" and "Transfers":
As it operates currently, "Total" is a poor name; "Difference" would be
more accurate.  However, if you change the sign-reversal treatment you may
have positive income, negative expenses, and "Total" would be an accurate
choice.

Transfers--isn't everything in double-entry accounting a transfer?  :-)

Just totaling the Income/Expense/etc. would force the budgeter to do the
math for each period.  Having some sort of net at the bottom is very good.
Maybe call it "Net Budgeted Cash Flow"?  After all, I'm describing a
planned cash flow.

Hope this made sense.

-- 
*Jim Passmore*





On Tue, Oct 29, 2019 at 1:45 PM Michael or Penny Novack <
stepbystepfarm at comcast.net> wrote:

> On 10/29/2019 9:40 AM, Adrien Monteleone wrote:
> > No objection here —I always thought it odd that Liabilities didn’t have
> its own total line, and thought ’Transfers’ should only include Assets &
> Equity. (you are transferring one asset to another, with no effect on net
> position, but paying a liability would change your net position)
> >
> Assets and Equity are NOT "both assets"  << this is confusing a
> different meaning of equity>>
>
> A transfer between "assets" and "liabilities"does NOT change net
> position (ie: equity). A transfer from assets to liabilities that is
> "paying a liability" is a debit to a liability (reducing it) and a
> credit to an asset (reducing it) so no net change as the debit and
> credit will be equal. Taking on more debt, a debit to an asset and a
> credit to a liability also does not change net position (equity)
>
> What sort of transaction would be a transfer between an asset and
> equity?  Why do you think that this would not be a change to your net
> position?
>
> Michael D Novack
>
>
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