[GNC] Equity Account "problem"

[Michael or Penny Novack]

On 7/11/2023 6:48 PM, Default User wrote:
> Hi!
>
> Is there a way to have Gnucash 4.13 (Debian GNU/Linux 12 Bookworm)
> automatically calculate, and update "Equity" in the main accounts tab,
> to show the "real" value of total Equity, after any action (or at least
> transaction) that would affect "real" equity?
>
> Example:
> Start with the GnuCash "Common Accounts", as in gcashdata_1.gnucash
> from the Tutorial and Concepts Guide, with all accounts set to $0.00.

Stop -- I understand your example. Your problem is that you do not 
understand what accounts of type "income" and "expense" are. They are in 
fact, "temporary" accounts of fundamental type "equity". They are being 
kept separate so that they may be viewed. It is the "close the books" 
operation that would close them out to equity.

Look at a Balance Sheet report. Do you see a "retained earnings" of 
"retained losses". Those aren't accounts but the net of all income and 
expense accounts whose balances have not been transferred to equity (by 
a close the books). So if you want to see your actual equity, you can 
run this report and add/subtract. Or of course, do a "close the books" 
<< trust me, you probably won't ever bother* >>

History -- In the early days of double entry bookkeeping there were no 
income/expense accounts and income or expense transactions WERE written 
to equity. That meant you could immediately see "what is my equity 
today?" but would have to look through the journal to answer a question 
like :how many ducats of interest did we get last month?". That's how 
the temporary accounts of type income and expense came about.

But more important, why do you want to know instantaneous equity? Having 
lots of equity, having increasing equity, might not save you if having a 
"cash flow" problem. In other words, lots of things determine economic 
well being.


Michael D Novack

* Not bother because gnucash can produce the report you would get during 
a traditional "close the books" without closing the books.