[GNC] Can someone tell me how A-L=Eq+(I-Ex) is correct?

[David T.]

I'm surprised no one has mentioned https://www.gnucash.org/docs/v4/C/gnucash-guide/basics-accounting1.html#basics-accountingequation2

That's the Tutorial & Guide page that explains the concept.

David T.

On August 31, 2022 10:15:04 AM GMT+03:00, Gyle McCollam <gmccollam at live.com> wrote:
>Neal,
>Your welcome.  I see a few others have responded with similar thoughts and explanations.  I'm sorry I forgot to respond to all, so the list did not see my original email, but as I said other replied with similar answers, but in more detail.
>
>Don't worry, I trust you will get there.  I'm sure there are engineering concepts that we accountants would not understand immediately.  The key to this is that at any point in time (Income -  expenses = 🔺Equity).  So if your income and expenses aren't zero (close Books at the end of the year), you have to add this expression to A=I (+/-) Eq to get it to equal.
>
>
>Thank You,
>
>Gyle McCollam
>
>Gyle McCollam
>
>gmccollam at live.com<mailto:gmccollam at gyleshomes.com>           email
>
>________________________________
>From: W. Neal Lewis <wnlewis at southwind.net>
>Sent: Tuesday, August 30, 2022 9:24 PM
>To: Gyle McCollam <gmccollam at live.com>
>Subject: Re: [GNC] Can someone tell me how A-L=Eq+(I-Ex) is correct?
>
>Gyle,
>
>Thank you for your reply.
>
>Let me think about it for a while.
>
>It does not yet make sense to my Engineering brain.
>
>Sorry to be so dense, but terms as well as numbers must balance for an equation to be correct.
>
>Best regards,
>
>Neal Lewis
>
>
>
>On 8/28/22 6:28 PM, Gyle McCollam wrote:
>At the end of the year I (income) - Ex (expenses) is your increase/decrease, depending on whether the number is positve or negative, to equity for the year and at any given point during the year it is your increase/decrease YTD equity figure.  So realistically, when you added +(I-Ex) and it should be minus Ex, you haven't really changed the equation A=L+Eq.
>
>
>Thank You,
>
>Gyle McCollam
>
>Gyle McCollam
>
>gmccollam at live.com<mailto:gmccollam at gyleshomes.com>           email
>
>________________________________
>From: gnucash-user <gnucash-user-bounces+gylemc=gmail.com at gnucash.org><mailto:gnucash-user-bounces+gylemc=gmail.com at gnucash.org> on behalf of W. Neal Lewis <wnlewis at southwind.net><mailto:wnlewis at southwind.net>
>Sent: Sunday, August 28, 2022 6:38 PM
>To: gnucash-user at gnucash.org<mailto:gnucash-user at gnucash.org> <gnucash-user at gnucash.org><mailto:gnucash-user at gnucash.org>
>Subject: [GNC] Can someone tell me how A-L=Eq+(I-Ex) is correct?
>
>I will agree that by mathematical logic, Assets-(Liabilities)=Equity. ∴
>Assets+(Liabilites)-(Liabilities)=Equity+Liability, or stated more
>simply, A=Eq+L. I have added Liability to both sides ∴ both sides remain
>equal.
>
>However, although (A+L)=Eq, (A+L)≠Eq+(I+Ex). I have added a term to the
>right side that is most decidedly not on the left ∴ they cannot be equal.
>
>∴ A and L must be terms that include other factors.
>
>Not good at accounting, I will ask what those other factors are.
>
>I want to use GnuCash but I am having trouble getting my mind to accept
>an equation that is not correct unless terms are redefined.
>
>Please help me with my (obviously) incorrect understandings.
>
>Thank you,
>
>Neal Lewis
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