[GNC] Account Types -- what are the implications of getting them wrong?

[Simon Roberts]

FWIW, I have taken the perspective that if I don't know what
category/account to put something in, I don't guess, I put it in
"Unbalanced" and then ask someone who knows. As I understand it, there
shouldn't be anything in that category, so it's a big red flag that you
can't miss that this thing needs attention. Then at suitable intervals, you
can ask your accountant, and learn. If you make a guess and get it wrong,
there's no obvious way, other than a really thoughtful audit, questioning
essentially everything, that will reliably catch all the erroneous guesses.

Just my two cents, of course, since I'm not an accountant either
(presumably if I were, I'd not be suffering from these uncertainties!)


On Mon, Feb 20, 2023 at 7:55 PM David Cousens <davidcousens49 at gmail.com>
wrote:

> Tim ,
>
> In most cases if you get an account type wrong you can edit the account
> type and
> its parent account from the account tree structure. There may be some
> limitations associated with the type of the parent account which may have
> to be
> worked around. In the worst case scenario you can create an account of the
> correct type and then delete the account of the wrong type. If there are
> transactions to the account you are deleting the dialogue will ask which
> account
> you wish them transferred to and here you specify the new account of the
> correct
> type. Apart from the basic top level account types Asset, Liability,
> Equity,
> Income and Expenses there are a number of account sub-types which are
> usually
> tied to aspects of the business features, stock trading etc
>
> David Cousens
>
> On Mon, 2023-02-20 at 19:25 -0600, ml at tgr66.me wrote:
> > Thanks Jim for the reply.
> >
> > > On Feb 20, 2023, at 15:49, Jim DeLaHunt <list+gnucash at jdlh.com> wrote:
> > >
> > > It sounds like you are trying to answer two questions:
> > >
> > > 1. How do you extract meaning from account name strings in incoming
> > > migration data, such that you can pick the appropriate GnuCash account
> type?
> >
> > Ummm, sort of. Yes, I am asking myself that because I have to make
> decisions.
> > But I was really providing the scenarios to help shape the reader's
> thinking
> > about the implications.
> >
> > Yes, the question I’m asking is in the subject line. I should have
> included it
> > more in the body. I did ask specifically in the body though if there was
> "any
> > negative implications of assigning too general of an account type to an
> > account?” I’m inclined to err on the side of general and tell the user
> they
> > need to review all of them and edit appropriately based on GnuCash’s
> > documentation. But, it is still a good challenge to get them as close to
> right
> > as possible.
> >
> > The decisions I’m making are naturally heavily influenced by my personal
> > account and categories structure in Quicken along with my understanding
> about
> > how GnuCash structures accounts and defines types. There are undoubtedly
> > members of this mailing list who migrated data from some other app to
> GnuCash.
> > They made decisions about account types, perhaps after creating their
> chart of
> > accounts, and they may have found adjustments were necessary because
> something
> > didn’t work as expected. I believe hearing that would be helpful to me
> and
> > others.
> >
> > >
> > > 2. What are the GnuCash account types, and what are their meanings (or,
> > > purposes, or semantics)?
> > >
> > > I think question 1 is up to you. It is not a GnuCash question.
> > >
> > > The place to start for question 2 is the GnuCash /Help/ documentation,
> 5.1.
> > > *Types of GnuCash Accounts*[1]. You might find it helpful to consult
> the
> > > notes about what kinds of child account type each parent account type
> > > accepts.  Missing from this page is the Trading Account type.
> > >
> >
> > I had read
> >
> https://code.gnucash.org/docs/MAINT/group__Account.html#ga398c5d6f7a5127db7b81789e05262908
> >  <
> >
> https://code.gnucash.org/docs/MAINT/group__Account.html#ga398c5d6f7a5127db7b81789e05262908
> > > but will make sure to go back and read section 5.1. I appreciate that
> you’ve
> > highlighted that there can be child-parent mismatches as that is a real
> > implication. I realize that if a user migrating to GnuCash using the
> tool I’m
> > developing had a Credit Card under an Asset account, they could
> potentially
> > have a problem. I’m using PieCash for my GnuCash writes, and I *think* it
> > checks the parent-child rules, but I might want to test that.
> >
> >
> > > Trading accounts are described in the GnuCash /Tutorial and Concepts
> Guide/,
> > > 12.3. *Automatically Recording Currency Transactions using Trading
> > > Accounts*[2], and at wiki page *Trading Accounts*[3].
> > >
> > > You might have to resort to reading the GnuCash code[4] to answer more
> > > detailed questions. I remember doing this once to clear up some of my
> own
> > > questions.
> > >
> > > Your subject: line asks, "what are the implications of getting [Account
> > > Types] wrong?" I don't see you asking that in your message body. But
> as far
> > > as I know, the implication can be unusability if you get the account
> type
> > > very wrong (e.g. an Asset type for what should be an Expense type
> account),
> > > or inconvenience if you get the account type a little wrong (e.g. no
> option
> > > to add an interest payment during the reconciliation process if you
> assign a
> > > Liability type for what should be a Credit type account). Note that
> users
> > > can, within limits, change account types for a book which is in use.
> That
> > > limits the negative implications of migration software making the wrong
> > > choice of account type.
> > >
> >
> > Great comments. Thank you. I did notice oddities yesterday when I
> created a
> > new book (GnuCash->File-New File) and created a full chart of accounts.
> In
> > particular, in Investments. Under Retirement, Bond accounts have a type
> of
> > Stock, so they have Shares/Buy/Sell, etc columns in the register. So
> those
> > look okay (other than calling a Bond a Stock type, which feels odd to
> me). But
> > as far as implications, I don’t see any issue. However, I realized this
> > partially answers the question about implications of opting general vice
> > specific. And this is reflected, I think, in GnuCash’s default account
> > structure and types.
> >
> > In the Bond, Market Index, Mutual Fund and Stock accounts under Brokerage
> > Account are all type Asset while the latter is Bank. So I’m guessing the
> logic
> > here is that *most* brokerage accounts have an associated sweep or bank
> > account. But, Brokerage Account is a Placeholder so I didn’t think
> > transactions would be recorded there. Admittedly, I may misunderstand so
> I’ll
> > need to experiment. I do see that Buy/Fee/Sell show up as Actions in one
> of
> > those registers.
> >
> > My app’s logic today would assign the type Stock to an account with the
> word
> > “brokerage” included. I’m now questioning this based on GnuCash’s default
> > setup.
> >
> > So specifically, why does GnuCash’s default chart of accounts have the
> > brokerage accounts as Assets while the retirement accounts are either
> Stock or
> > Mutual Fund?
> >
> > Thank you again.
> >
> > Tim
> >
> > > You are welcome to pose more specific questions to this list, if you
> like.
> > >
> > > And, while reading the documentation you may come up with suggestions
> for
> > > improved documentation wording. I encourage you to propose those as
> pull
> > > requests, or to the gnucash-dev mailing list. Part of what makes
> GnuCash so
> > > good is that many hands help to improve it.
> > >
> > > Best regards,
> > >      —Jim DeLaHunt
> > >
> > > [1] <https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=help>,
> > > temporarily hosted at
> > > <https://code.gnucash.org/website/viewdoc.phtml?rev=4&lang=C&doc=help>
> while
> > > www.gnucash.org's web server is offline.
> > >
> > > [2]
> > > <
> https://www.gnucash.org/docs/v4/C/gnucash-guide/currency_trading_accts.html
> > > >, temporarily
> > > <
> https://code.gnucash.org/website/docs/v4/C/gnucash-guide/currency_trading_a
> > > ccts.html>
> > >
> > > [3] <https://wiki.gnucash.org/wiki/Trading_Accounts>
> > >
> > > [4] <https://github.com/GnuCash/gnucash>
> > >
> > > _______________________________________________
> > > gnucash-user mailing list
> > > gnucash-user at gnucash.org
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> >
> > > On 2023-02-19 05:32, ml at tgr66.me wrote:
> > >
> > > > The approach I’m taking in a migration app I’m writing will be
> > > > conservative, erring on the side of more general vice more specific.
> For
> > > > example, ASSET, LIABILITY, INCOME, EXPENSE, EQUITY are pretty easy to
> > > > accurately apply based on account names (for example, “assets:current
> > > > assets:cash”). In an initial round of type assignments, this account
> would
> > > > get ASSET as its type. In a deeper subsequent look, it should be
> > > > reassigned with a type of CASH.
> > > >
> > > > INCOME, EXPENSE and EQUITY types don’t have sub-types I see, so
> those will
> > > > be even easier. I don’t foresee any issues with those.
> > > >
> > > > LIABILITY and CREDIT don’t appear too difficult as there just aren’t
> that
> > > > many options. First I’ll assign LIABILITY and if the words “credit
> card”
> > > > or “credit cards” exist in the rest of the account path, I’ll switch
> to
> > > > CREDIT, otherwise, leave it alone.
> > > >
> > > > Assets and Investments will be the trickiest. Let me start with
> Assets
> > > > first.
> > > >
> > > > Assume an imported account has the path and name of
> “assets:savings:family
> > > > savings”. Getting this typed as an ASSET is pretty straightforward.
> > > > Ideally, however, it would be typed as BANK.
> > > >
> > > > Or SHOULD it? Perhaps this family puts its savings in old coffee cans
> > > > under the back porch. So, I’d be inclined to leave this as ASSET.
> The user
> > > > can change it, but are there any negative implications of assigning
> too
> > > > general of an account type to an account?
> > > >
> > > > However, if the name has the word “account” in it, well, then I’d be
> > > > confident assigning a type of BANK.
> > > >
> > > > Investment accounts will be the trickiest I believe. Heck, I’m not
> sure I
> > > > understand the differences.
> > > >
> > > > When I create a new account in GnuCash, I’m surprised at some of the
> > > > assignments made when creating the hierarchy. For example,
> > > > “Assets:Investments:Brokerage Account” is a placeholder with type of
> BANK.
> > > > I would be inclined to assign any placeholder accounts a more generic
> > > > type. In this case, ASSET. Again, are there any negative
> implications of
> > > > me taking this approach?
> > > >
> > > > Regardless, I will direct the user to review all of them once
> created in
> > > > GnuCash to ensure they align with their exceptions, but are there
> > > > consequences if I get them wrong?
> > > >
> > > > And finally, TRADING. I don’t see any of those in the initial
> account list
> > > > created when I make a new file. So, for now, I’ll ignore this. Is
> that
> > > > okay?
> >
> > _______________________________________________
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-- 
Simon Roberts
(303) 249 3613