[GNC] Can I add to Equity?

[Stan Brown]

On 2022-12-02 07:21, Michael or Penny Novack wrote:

> So my GUESS is you are asking us, what should be the other side of the
> transaction that enters this amount? << again, this is not really a
> gnucash question since would be the same question no matter how the
> books were kept >>
> 
> Personally, I'd probably use Imbalance as the most logical. After all,
> you are in effect telling us that by convention, books for a business
> entity in the UK start out out of balance by 1.

With respect, I think that's a dangerous suggestion.

Imbalance does not normally appear anywhere, or if it does it appears
with a balance of zero. When it appears with a nonzero balance, that is
very useful because it points out that there was an unbalanced
transaction someplace, which you need to find and fix. That's a very
useful indicator, not to be given up lightly.

It's the same principle as writing code -- if your code compiles with
any error messages at all, you don't say "oh, this one doesn't matter,"
even if that's true. You eliminate whatever the compiler didn't like.
Otherwise a time will come when that message _does_ matter, in the same
situation or a different one, and you'll have a bug in your program.

Much better, in my opinion, is to create a balanced transaction. If the
pound is actually paid in, the transaction would be a debit to Cash or
Bank and a credit to Share Capital. If the pound is completely
fictitious, the debit would be to an Expense account (which could also
be used for other expenses of setting up the business) and credit to
Share Capital.

(And I am astonished that Kirkby's accountant would suggest having
unbalanced books. As far as I know, double-entry bookkeeping is standard
accounting practice in the UK as well. Perhaps the accountant just
assumed that Kirkby knew that and would select the appropriate account
for the debit side of the transaction, or perhaps the accountant did
suggest an appropriate debit account but Kirkby didn't tell us about it.)

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com>