[GNC] I need basic help

[Adrien Monteleone]

Cool, thanks!

(I attempted to setup a documentation build workflow long ago but put it 
on a back burner along with a pile of other things. I need to bring it 
to the front. In the meantime, thanks for considering this a worthy 
addition.)

There is already some discussion with nice graphics concerning the 
Accounting Equation. Perhaps that is the place to work this material in.

Regards,
Adrien

On 10/22/23 3:44 PM, David Cousens wrote:
> Adrien,
> 
> This needs to make it into the Basics section of the Guide. I am planning to
> revise it when I get a break from grandchildren and other activities in line
> with some of flywire's comments re putting transaction explanation before the
> details of accounts.
> 
> David
> 
> On Sun, 2023-10-22 at 12:36 -0500, Adrien Monteleone wrote:
>> Edwin,
>>
>> Debit/Credit is just Left/Right.
>>
>>
>>
>> Maybe this will help...
>>
>> The Accounting Equation:
>>
>> Assets - Liabilities = Equity
>>
>>          (let's make all terms 'positive')
>>
>> Assets = Liabilities + Equity
>>
>>          (now, we'll split off a subset of Equity)
>>
>> Assets = Liabilities + Equity + Retained Earnings
>>
>>          (now, we'll substitute temporary accounts for Retained Earnings)
>>
>> Assets = Liabilities + Equity + (Income - Expenses)
>>
>>          (now, we'll once again, make all terms 'positive')
>>
>> Assets + Expenses = Liabilities + Equity + Income
>>
>>
>> And there, you have the full Accounting Equation with the five major
>> account types that GnuCash uses.
>>
>> -----
>>
>> In double-entry accounting, ALL transactions are in the form of:
>>
>> Debit = Credit
>>
>> Left = Right
>>
>>
>> The 'Debit' accounts (those that are normally (positive) a Debit
>> balance, and increase with a Debit, decrease with a Credit) are on the
>> left of the equation:
>>
>> Assets
>> Expenses
>>
>> The 'Credit' accounts (those that are normally (positive) a Credit
>> balance, and increase with a Credit, decrease with a Debit) are those on
>> the right of the equation:
>>
>> Liabilities
>> Equity
>> Income
>>
>> A negative balance in any account would indicate either an entry error
>> or a contra-balance situation. (rare for individuals)
>>
>> -----
>> You can move funds from the left to the right, or vice versa, or between
>> any accounts or types on the same side of the equation. (I will use the
>> abbreviations Dr. and Cr. here)
>>
>> Most texts will write transactions Debit first, then Credit as shown
>> below. The amounts are not shown, because they *must* be equal.
>>
>>
>> Example Left to Right - Asset to Liability (paying down a debt)
>>
>> Dr. Liabilities:Loan
>>     Cr. Assets:Cash
>>
>> result: decreased Loan owed, decreased Cash on hand, Assets decreased,
>> Liabilities decreased - equation still in balance
>>
>>
>>
>> Example Right to Left - Income to Asset (receipt of income)
>>
>> Dr. Assets:Cash
>>     Cr. Income:Salary
>>
>> result: increased Cash on hand, increased Salary earned, Assets
>> increased, Income increased - equation still in balance
>>
>>
>>
>> Example Left to Left(same type) - Asset to Asset (buying land outright)
>>
>> Dr. Assets:Land
>>     Cr. Assets:Cash
>>
>> result: increased Land owned, decreased Cash on hand, Assets shifted -
>> equation still in balance
>>
>>
>>
>> Example Left to Left(different type) - Asset to Expense (buying groceries)
>>
>> Dr. Expenses:Food
>>     Cr. Assets:Cash
>>
>> result: increased Food expense, decreased Cash on hand, Expenses
>> increased, Assets decreased - equation still in balance
>>
>>
>>
>> Example Right to Right(same type) - Liability to Liability (paying down
>> a loan with a credit card)
>>
>> Dr. Liabilities:Loan
>>     Cr. Liabilities:Credit Card
>>
>> result: decreased Loan owed, increased Credit Card owed, Liabilities
>> shifted - equation still in balance
>>
>>
>>
>> Example Right to Right(different type) - Equity to Liability
>> (recognition of dividends to be paid - business transaction)
>>
>> Dr. Equity:Retained Earnings
>>     Cr. Liabilities:Dividends Payable
>>
>> result: decreased Retained Earnings, increased Dividends owed to
>> shareholders, Equity decreased, Liability increased - equation remains
>> in balance.
>>
>>
>>
>> *it is rare and unusualy for an individual to shift Equity to
>> Liabilities and vice versa. Forgiveness of Debt may in some
>> jurisdictions be a transfer from Liabilities to Income.
>>
>>
>> Regards,
>> Adrien
>>
>> On 10/20/23 12:02 AM, Edwin Booth via gnucash-user wrote:
>>> I need to wrap my head around the whole “debit/credit” concept.
>>
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