[GNC] Beginner Accounting Question Using GnuCash

[David H]

Patrick,

Look carefully at point 2, one side of your transaction should be an
expense as you are expending funds to buy stock eg Expense >> Stock
Purchases rather than Stock on Hand ?

Cheers David H



On Fri, 17 Dec 2021 at 21:20, Patrick Skelton <patrickskelton at gmail.com>
wrote:

> Hi,
>
> I am trying to get my head around double-entry accounting. I think I have
> kind-of got it. I have just set up a stripped down set of accounts and
> tried a handful of transactions, to see how they affect profit-and-loss and
> the balance sheet. It all seems to make sense except that there is one
> piece of information that seems to vanish, and I am worried this means I am
> doing something wrong.
>
> My transactions beginning with all zero balances are:
>
> (N*ote:* I have added some dates to give context to my later question)
>
>    1. 1st Nov: I pay £100 into the business *Bank* financed by *Owner's
>    Equity*.
>    2. 2nd Nov: I buy some paper costing £12, which comes from *Bank* and
>    goes into *Stock on Hand*.
>    3. 3rd Dec: I sell a notepad for £12, which credits *Bank* and is
>    assigned to *Income - Sales*.
>    4. 4th Dec: I transfer the cost of the paper used to make the notepad
>    (£1.00) from *Stock on Hand* to *Expenses - Cost of Materials*.
>
> The Balance Sheet shows £111. Liabilities are zero. Retained Earnings are
> £11, which gives total equity of £111. Thus the sheet is balanced.
>
> My question is that no matter what report I run using whatever dates, I
> cannot see the £12 I spent on stock. All I ever see is the £1 that I
> decided was the cost of the paper taken from stock.
>
> Even if I do reports only for the month of November, I don't see the £12 I
> paid for stock because the money came from my bank and went into stock,
> which are both Asset accounts.
>
> Is there a better way to do these transactions so that I could ask the
> question: how much have I spent on stock this month?
>
> I am a complete newbie so would welcome any help or advice (short of 'get
> an accountant', which I would love to but can't afford).
>
> Kind wishes - Patrick
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