[GNC] new user, new file

[Stan Brown]

On 2023-01-03 13:15, Jamie Tolbert wrote:
> Starting a new business. For the next month or so, what few bills I have
> will be paid by me, until I get my business checking set up. Its been
> years since I studied double entry accounting, but I thought if I paid a
> bill for lets say 100.00, I would credit my owner account for 100.00 and
> debit whatever expense account it is. I cant find how to credit my owner
> account, or opening balance.

Welcome to GnuCash!

I strongly recommend a quick review of double-entry bookkeeping, for
instance in GC's Tutorial and Concepts manual. Believe me, it'll save
you a world of pain. (GC just automates the big leatherbound ledgers of
traditional bookkeeping. The "rules" of using GC are just the same as
the rules of bookkeeping.)

In your example, you would not credit Equity ("my owner account") when
you pay a bill. Crediting an equity account increases its balance, and
you don't own anything more than you did before you paid the bill. Your
equity in the business is the net of assets minus liabilities, but it's
quite rare that you would make any transaction in an equity account
directly. (The net of current-period income minus expenses is a special
kind of equity, often called Retained Earnings.)

Liabilities, Equity, Income -- credits increase, debits decrease
Assets, Expenses -- credits decrease, debits increase

The bill is a liability, specifically in Accounts Payable, and credits
also increase liability balances. So you would _debit_ Accounts Payable
to reduce the amount you owe.

What are you paying the bill with? Presumably cash, or maybe a check or
bank transfer, possibly a credit card. You would _credit_ the account
for whatever method you used to pay the bill.

Your cash and bank accounts are assets, so a credit reduces their
balance. Your credit cards are liabilities, just like Accounts Payable,
so a credit _increases_ their balance.(*) Either way it makes sense: you
give up some cash or money-in-bank (credit an asset) to wipe out a bill
(debit a liability), _or_ you_ add to your credit-card balance (credit a
liability) to wipe out a bill (debit a different liability).

In every transaction, total credits must equal total debits.

(*)People often get confused about credits and debits when dealing with
a bank account or credit card, a credit on the bank's books is a debit
on yours, and vice versa. When you write a check, you are reducing the
amount in your bank account (crediting an asset). But to the bank, your
checking account is a liability, so when your check is cashed the bank
reduces the amount in your checking account (debiting a liability).
Similarly, when you return a purchase for a "credit", it's a credit on
the bank's books (reducing an asset, Accounts Receivable) but it's
really a debit to you (reducing your liability, Accounts Payable).

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