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

[W. Neal Lewis]

Michael,

Thank you. Those ideas are another thing that I'm getting my head around.

Best regards,

Neal Lewis

On 8/31/22 10:44 AM, Michael or Penny Novack wrote:
> On 8/31/2022 4:08 AM, Gyle McCollam wrote:
>> That is an "L" not an "I" in the equation at the end of my email: 
>> "A=I (+/-) Eq" to get it to equal.
>>
> There are only three FUNDAMENTAL account types, asset, liability, and 
> equity. The confusion about the equation is perhaps because our 
> computer automatically gives us SOME totals but not others.
>
> Thus the equation is really............
>
> (sum of accounts of type asset) = (sum of accounts of type equity) + 
> (sum of accounts of type liability)  AND there is "sense reversal" 
> implied because we are really saying simply
>
> total debits = total credits as opposed to arithmetic equality (since 
> debit and credit have opposite "sense")
>
> Like I said, BOTH accounts of type income and accounts of type expense 
> are actually of type equity. They did not originally exist (say in the 
> 14th Century) and the opposite side of transactions that were items of 
> income or items of expense were immediately entered against equity.
>
> When you ask gnucash to produce a Balance Sheet the net of those 
> accounts (income accounts and expense accounts) IS there under the 
> pseudo account "retained gains" or "retained losses" as part of the 
> equity total.
>
> Michael D Novack
>
>
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