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

[Christopher Lam]

Hi Edward and others.

For a few weeks I've been reviewing the budget module.

It's true that the budget *editor* prematurely reverses the signs of
amounts, handling period amounts (i.e. changes in amounts in a period)
assuming sign-reversals is set as credit-accounts. The advantage is
positive numbers throughout: budgeted expense +ve, budgeted income +ve, and
stored internally as such. This despite the equation whereby incomes
normally becomes more negative with time, therefore budgeted income should
be -ve. The budget *viewer* simply reports the numbers as-is i.e. positive
numbers everywhere. The amounts are reversed where appropriate for
processing in reports. The difficulty is that the budget
editor/viewer/reports do not show consistent amounts when sign-reversal
pref is changed.

It is being planned that: internally-stored budget amounts will be modified
in 4.0 onwards to reflect the internal changes. Therefore budgeted income
*internal* amounts will be negative. The editor and the viewer will respond
to sign-reversal preference. The reports will also be sensitive to it. But
the outcome will be a more consistent experience with the
editor/viewer/reports especially when preference is modified. The worst
case scenario may be instead of Income Bgt=$100, Act=$99, Diff=$1, the
report may display Bgt=-$100 Act=-$99 Diff=-$1.

Without this change the worst case report would be "Income Bgt=$100,
Act=-$99, Diff=$199" when the wrong sign-reversal preference is used.

This requires that GnuCash 4.0 onwards will perform a one-time fix to
modify the signs of budget internal amounts. It is hoped that the budget
editor&viewer will be more intuitive, and the reports will be consistent as
well. But it will have to make educated guesses about the previously
created budgets... I tend to think that most people will have created them
using Sign Reverses = Credit Accounts preference, but cannot really
confirm. I think the budgets just don't work well with other sign reversal
options.

So the question to everyone using budgets is -- is it safe to assume most
of you are using General / Sign Reverses pref = Credit Accounts?

On Wed, 8 Mar 2017 at 08:31, Edward Doolittle <edward.doolittle at gmail.com>
wrote:

> Hello Geert, David T., Everyone,
>
> I had a chance to spend a few minutes with the budget module, to try to
> make sense of the signs.
>
> First, Here's what I expect: With Edit -> Preferences -> Accounts ->
> Reverse Balanced accounts set to "None", I would expect positive values in
> the budget to correspond to debits. With Edit -> Preferences -> Accounts ->
> Reverse Balanced accounts set to "Credit accounts", I would expect positive
> values in Assets and Expenses to correspond to debits, and positive values
> in Equity, Income, and Liabilities to correspond to credits.
>
> What actually happens: The budget module appears to be insensitive to the
> Reversed Balanced accounts setting. However, its operation does correspond
> to "reverse credit accounts"; to be specific, positive amounts entered into
> Assets or Expenses correspond to debits, and positive values in Income or
> Liabilities correspond to credits.
>
> (See attached screen shot, in which (for the first six months of the budget
> I chose a pair of account types and entered +100 into the corresponding
> spaces in the budget. You can see that +100 corresponds to a debit for
> debit accounts and a credit for credit accounts.)
>
> To answer Geert's original question, to pay down a debt using an asset you
> would enter -100 in the asset account (credit the asset) and -100 in the
> liability account (debit the liability). That is how the budget module
> would represent that transaction, and how folks using the "reverse credit
> accounts" feature would understand it to be.
>
> For those who prefer setting "Reverse Balanced accounts" to "None", Geert's
> suggestion of representing the transaction by -100 to assets and +100 to
> liabilities would be correct. But those people would be in the minority I
> suppose.
>
> What is still wrong with the budget module:
>
> 1) The module should be sensitive to the setting of "Reverse balanced
> accounts". It currently does not seem to be, that I could tell.
>
> 2) The "Transfers" summary line shows the net effect of budgeting amounts
> to assets and liabilities. However, the transfers line is like a debit
> account, which causes the sign to switch in a disconcerting way when
> liabilities are budgeted. (See months 5 and 6, i.e., July and August, in
> the screenshot.) I suggest breaking the Transfers line apart into Assets
> and Liabilities, or, at least, showing the formula by which it is computed
> in the row title (i.e., "Transfers (Transfers to Assets - Transfers from
> Liabilities)" (that is, if "reverse credit accounts" is in effect)).
>
> However, there's no reason to assume that an entry of type "Transfers"
> would be like a debit account, so instead I suggest it would be better to
> get rid of the "Transfers" summary line altogether and instead include
> separate lines for "Transfers to Assets" and "Transfers from Liabilities".
>
> (To compound the issue, the Total line seems to be a credit account, of
> type Equity perhaps, which can cause a sign to bounce twice as we follow it
> through. +100 in Liabilities becomes -100 in the Transfers summary line
> which becomes +100 in the Total summary line.)
>
> 3) The Total row title should include the formula by which it is
> calculated, i.e., (when "reverse credit accounts" is in effect) the row
> title should be "Total (Income - Expenses - Transfers to Assets + Transfers
> from Liabilities)".
>
> 4) Since the use of negative signs in Liabilities is confusing to many
> people, this all should be carefully documented somewhere.
>
> 5) Note there is something odd happening in the last four months of my
> artificial budget when I involve "Equity". I think this means that we
> should think about the Total row in the budget as a credit account of type
> Equity, so transfers to/from Equity have no effect on the Total. Still, it
> seems kind of odd. I would suggest including Equity in the summary rows at
> the bottom (Transfers from Equity) and in the Total, which would then be
> "Total (Income - Expenses - Transfers to Assets + Transfers from
> Liabilities + Transfers from Equity)".
>
> 6) There seem to be some other problems with the budget module that not
> everyone has. The budget module eats up a lot of compute cycles on my
> Windows machine, making it very slow to respond to typing, but not on my
> Mac. And I have trouble with one of my credit cards not being rolled up
> into the total Liabilities correctly. I'll have to spend some more time
> tracking those problems down.
>
> 7) I haven't begun to address the budget reports, but the budget balance
> sheet does seem to be wrong, as Larry and others have noted.
>
> Edward
>
>
> On 1 March 2017 at 06:10, David T. via gnucash-user <
> gnucash-user at gnucash.org> wrote:
>
> >
> > > On Mar 1, 2017, at 3:30 PM, Geert Janssens <geert.gnucash at kobaltwit.be
> >
> > wrote:
> > >
> > > Background of my question: recently someone proposed a fix for the
> > gnucash
> > > budget balance sheet report [1] because it was showing incorrect values
> > > (according to the poster).
> > >
> > > As budgetting is an area of gnucash I'm not at all familiar with all,
> I'm
> > > having trouble estimating whether the patch submitter really did
> > discover a
> > > bug and the fix is valid, or whether he is using the budget feature
> > > incorrectly.
> > >
> > > My question is simply this:
> > > I want to budget a repayment of a credit card (from my bank account).
> > >
> > > How should I enter this in a budget:
> > > Bank: 100.00-
> > > Credit card: 100.00-
> > >
> > > Or
> > > Bank: 100.00-
> > > Credit card: 100.00(+)
> > >
> > > I would expect the latter as I think transactions need to balance.
> > However the
> > > other person expects the former.
> > >
> > > I've read the gnucash documentation which is unfortunately not showing
> > any
> > > example or detail in this regard.
> > >
> > > In addition there's an outstanding bug report [2] with the exact same
> > request,
> > > so answering this here, would solve two problems at once :)
> > >
> > > Thanks,
> > >
> > > Geert
> > >
> > >
> > > [1] https://github.com/Gnucash/gnucash/pull/120
> > > [2] https://bugzilla.gnome.org/show_bug.cgi?id=689754
> > > _______________________________________________
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> >
> > Geert,
> >
> > I’ll begin by saying I may misunderstand the original problem, but when I
> > look at the Budget Balance report, I frankly think that it is screwed up
> in
> > more significant ways than how it represents liabilities.
> >
> > As to the original problem, I think there is a disconnect between how the
> > budget features operate, and how the rest of the application operates,
> > which the bug hints at. In reference to the comments on the pull
> request, I
> > turned off Preferences->Reverse Signs, and looked at the results of both
> > the CoA and Budget info. What I noticed: the Budget values *don’t* change
> > with the preference, but the report and the CoA *do* change. In other
> > words, if I change the preference to reverse Income & Expense accounts,
> the
> > CoA reflects this (i.e, they both display as positive values), but the
> > values in the budget seemingly remain as originally calculated, with
> > negative values. I am not clear on what exactly is happening, because the
> > report seems to still work, even though the budget numbers retain their
> > original values. If I recalculate the budget numbers, however, they take
> on
> > (and keep) the current signs. The report continues to behave
> consistently,
> > regardless of the sign displayed in the budget. So, it is not clear
> whether
> > one should enter a negative value (reduce the liability by entering a
> > negative number in the budget) or a positive one.
> >
> > So, it seems to me that it is perhaps very understandable that a user
> > would receive confusing results. It is not clear to me what the
> resolution
> > is, except to say that the current situation is highly confusing.
> >
> > Be all that as it may, the report itself is fundamentally troubling for
> > me. For starters, which accounts is it including, and for what purpose?
> > When I run this report, I get a listing of every account in my
> > file—regardless of whether accounts are hidden, empty, zero balance, or
> > part of the budget. It would seem to me that the Budget Balance Sheet
> would
> > only include accounts that the user has designated in the underlying
> > budget. This is not helped by the fact that the options to exclude zero
> > balance/zero value accounts doesn’t seem to work.
> >
> > Next, it is very difficult to determine that this report apparently is
> > tallying up the numbers from the budget entries. At least, based on the
> > liability account that I was using to examine this bug’s behavior, that’s
> > what it seems to do. I don’t know for sure, however, because none of the
> > other numbers seem to match from the budget the the report. Confusing the
> > matter is the fact that values turn up for accounts without budget
> > numbers—in my case, the report includes commodity holdings info, even
> > though they are not part of the budget. So, it is anyone’s guess what the
> > report actually includes.
> >
> > David
> > _______________________________________________
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> > gnucash-user at gnucash.org
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> >
>
>
>
> --
> Edward Doolittle
> Associate Professor of Mathematics
> First Nations University of Canada
> 1 First Nations Way, Regina SK S4S 7K2
>
> « Toutes les fois que je donne une place vacante, je fais cent mécontents
> et un ingrat. »
> -- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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