[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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