[GNC] Asset vs Equity accounts?

[Michael or Penny Novack]

On 2/15/2021 5:17 PM, Adrien Monteleone wrote:

>
> (technically, Income & Expenses are 'temporary' Equity accounts, but 
> GnuCash gives them their own 'top-level' with Assets, Equity & 
> Liabilities. In the pen&paper days, you closed these out at the end of 
> the year to Retained Earnings, also an Equity account.)
>
Even more pedantic (from somebody who was first keeping books in those 
days when it was pen and ink in paper) you FIRST closed the income and 
expense accounts to a special (equity) account called "profit and loss" 
and you closed THAT account with the net profit (or loss) to retained 
earnings. The closed "profit and loss" account became your "Profit and 
Loss" report.

> Thus the expanded equation is:
>
>     Assets = Liabilities + Income - Expenses 

Well  ----------- Assets = Liabilities + Equity + Income - Expenses  < 
there really isn't any subtraction; expenses are debits and this is the 
credit side of the equation>

Michael D Novack