[GNC] Asset vs Equity accounts?

[Adrien Monteleone]

On 2/15/21 4:37 PM, Michael or Penny Novack wrote:
> 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.

How did I forget? Yes, I learned it that way as well.

> 
>> 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>

Yeah, I once tried to explain to my Mom & Dad how accounting isn't 
really about math equations, but how you 'account' for what you did. 
They never got it.

Regards,
Adrien