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

W. Neal Lewis wnlewis at southwind.net
Wed Aug 31 22:08:35 EDT 2022


David,

That's where this all started.

It didn't make sense so I thought I would ask people who were more 
knowledgeable.

I did look on line and nothing on line made any more sense.

So, thank you for your help.

Best regards,

Neal Lewis

On 8/31/22 3:55 AM, David T. wrote:
> 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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