[GNC] new to gnucash

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[GNC] new to gnucash

Mike Kerstetter
Hello all. I'm brand new to gnucash. I want it to do just the basics of
keeping a register and reconciliation of a couple bank and credit card
accounts. I had Money Sunset Deluxe and currently have Quicken (which is
now charging a yearly subscription). I'm muddling through setting up my
accounts and I am baffled at the seemingly backward credit and debit
columns in the register. A deposit to my Checking (or payment to my
credit card account) shows up under "DEBIT" and a charge to my accounts
shows up under "CREDIT".  The balance is correct. Am I doing something
wrong in my set-up?

Thanks,

Mike Kerstetter
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Re: [GNC] new to gnucash

Jeff Abrahamson
In accounting, a debit is a movement of funds towards something, a
credit away from.  So you debit a bank account when you move money into
it, credit it when you move money out.

The confusion arises from popular usage: for example, when your bank
sends you a statement, they are showing the credit and debit columns
from /their/ perspective.  To the bank, your account is a liability
(payable to you).  The debits are movements of funds that reduce that
liability, the credits are movements of funds that increase the liability.

It eventually feels natural, but it's also natural to find this quite
weird when you first start using proper accounting language.

Jeff Abrahamson

http://p27.eu/jeff/
http://transport-nantes.com/


On 05/01/19 17:41, Mike Kerstetter wrote:

> Hello all. I'm brand new to gnucash. I want it to do just the basics
> of keeping a register and reconciliation of a couple bank and credit
> card accounts. I had Money Sunset Deluxe and currently have Quicken
> (which is now charging a yearly subscription). I'm muddling through
> setting up my accounts and I am baffled at the seemingly backward
> credit and debit columns in the register. A deposit to my Checking (or
> payment to my credit card account) shows up under "DEBIT" and a charge
> to my accounts shows up under "CREDIT".  The balance is correct. Am I
> doing something wrong in my set-up?
>
> Thanks,
>
> Mike Kerstetter
> _______________________________________________
> gnucash-user mailing list
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http://p27.eu/jeff/
http://transport-nantes.com/

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Re: [GNC] new to gnucash

Stephen M. Butler
In reply to this post by Mike Kerstetter
Sounds right to me.

Remember that Asset and Expense accounts are Debit accounts.  So Debit
increases and Credit decreases the balances in the accounts.

Liability, Income, and Equity/Capital accounts are Credit accounts.  So
Debit decreases and Credit increases the balance.

On Sat, Jan 5, 2019, 08:44 Mike Kerstetter <[hidden email] wrote:

> Hello all. I'm brand new to gnucash. I want it to do just the basics of
> keeping a register and reconciliation of a couple bank and credit card
> accounts. I had Money Sunset Deluxe and currently have Quicken (which is
> now charging a yearly subscription). I'm muddling through setting up my
> accounts and I am baffled at the seemingly backward credit and debit
> columns in the register. A deposit to my Checking (or payment to my
> credit card account) shows up under "DEBIT" and a charge to my accounts
> shows up under "CREDIT".  The balance is correct. Am I doing something
> wrong in my set-up?
>
> Thanks,
>
> Mike Kerstetter
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> To update your subscription preferences or to unsubscribe:
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> If you are using Nabble or Gmane, please see
> https://wiki.gnucash.org/wiki/Mailing_Lists for more information.
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Re: [GNC] new to gnucash

foxylady337
In reply to this post by Mike Kerstetter
> On 5 Jan 2019, at 16:41, Mike Kerstetter <[hidden email]> wrote:
>
> Hello all. I'm brand new to gnucash. I want it to do just the basics of keeping a register and reconciliation of a couple bank and credit card accounts. I had Money Sunset Deluxe and currently have Quicken (which is now charging a yearly subscription). I'm muddling through setting up my accounts and I am baffled at the seemingly backward credit and debit columns in the register. A deposit to my Checking (or payment to my credit card account) shows up under "DEBIT" and a charge to my accounts shows up under "CREDIT".  The balance is correct. Am I doing something wrong in my set-up?
>
> Thanks,
>
> Mike Kerstetter

Hi, Mike.

Welcome to gnucash, and to the mysterious world of double-entry bookkeeping!

No, you haven’t made a mistake, cash received by an account is regarded as a debit and cash paid as a credit.

I’m not an accountant and I frequently have to chant “Debit the Receiver” to remind myself how it goes.

No doubt one of the experts in the forum can point you in the direction of an explanation of this counter-intuitive situation, or you could try Googling.

Michael



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Re: [GNC] new to gnucash

N B Day
In reply to this post by Mike Kerstetter
On Sat, 2019-01-05 at 11:41 -0500, Mike Kerstetter wrote:

> Hello all. I'm brand new to gnucash. I want it to do just the basics
> of
> keeping a register and reconciliation of a couple bank and credit
> card
> accounts. I had Money Sunset Deluxe and currently have Quicken (which
> is
> now charging a yearly subscription). I'm muddling through setting up
> my
> accounts and I am baffled at the seemingly backward credit and debit
> columns in the register. A deposit to my Checking (or payment to my
> credit card account) shows up under "DEBIT" and a charge to my
> accounts
> shows up under "CREDIT".  The balance is correct. Am I doing
> something
> wrong in my set-up?
>
> Thanks,
>
> Mike Kerstetter

What others have said.

In the meantime....

Uncheck the "Use formal accounting labels" box under Edit ->
Preferences -> Accounts.


--
N. B. Day
39.4042 North, 119.7377 West and 1387 meters up, Temp: -3.9 C (KRNO)
Sat, 2019-01-05 at 09:34 PST (UTC -0800)
Epicurus up 21:15,  1 user,  load average: 1.27, 0.66, 0.35
Linux 4.18.0-13-generic
Ubuntu Disco Dingo (development branch), GNOME Shell 3.30.1
This computer in service for 2900 days.

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Re: [GNC] new to gnucash

David Cousens
In reply to this post by Mike Kerstetter
Mike,

The first chapter or two of the Tutorial and Concepts guide

https://www.gnucash.org/docs/v3/C/gnucash-guide/index.html may help with
getting this straight.

Wikipedia also has quite good articles on double entry accounting, the
accounting equation and debits and credits.

https://en.wikipedia.org/wiki/Double-entry_bookkeeping_system
https://en.wikipedia.org/wiki/Debits_and_credits
https://en.wikipedia.org/wiki/Accounting_equation

David Cousens



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Re: [GNC] new to gnucash

Adrien Monteleone-2
In reply to this post by foxylady337
Nothing counter-intuitive about it. It’s a matter of perspective.

People are used to hearing the bank telling them that putting money in their account is a ‘credit’ to their account. That’s correct for the bank, because your account is their liability. Increasing a liability is done with a credit.

But in your books, that account is an asset, which is increased by a debit.

Regards,
Adrien

> On Jan 5, 2019, at 10:57 AM, Michael Hendry <[hidden email]> wrote:
>
>> On 5 Jan 2019, at 16:41, Mike Kerstetter <[hidden email]> wrote:
>>
>> Hello all. I'm brand new to gnucash. I want it to do just the basics of keeping a register and reconciliation of a couple bank and credit card accounts. I had Money Sunset Deluxe and currently have Quicken (which is now charging a yearly subscription). I'm muddling through setting up my accounts and I am baffled at the seemingly backward credit and debit columns in the register. A deposit to my Checking (or payment to my credit card account) shows up under "DEBIT" and a charge to my accounts shows up under "CREDIT".  The balance is correct. Am I doing something wrong in my set-up?
>>
>> Thanks,
>>
>> Mike Kerstetter
>
> Hi, Mike.
>
> Welcome to gnucash, and to the mysterious world of double-entry bookkeeping!
>
> No, you haven’t made a mistake, cash received by an account is regarded as a debit and cash paid as a credit.
>
> I’m not an accountant and I frequently have to chant “Debit the Receiver” to remind myself how it goes.
>
> No doubt one of the experts in the forum can point you in the direction of an explanation of this counter-intuitive situation, or you could try Googling.
>
> Michael
>
>
>
> _______________________________________________
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Re: [GNC] new to gnucash

Stan Brown
In reply to this post by Mike Kerstetter
> From: Mike Kerstetter <[hidden email]>
> To: [hidden email]
>
> ... I am baffled at the seemingly backward credit and debit
> columns in the register. A deposit to my Checking (or payment to my
> credit card account) shows up under "DEBIT" and a charge to my accounts
> shows up under "CREDIT".? The balance is correct. Am I doing something
> wrong in my set-up?

Hi, Mike.  Welcome to GnuCash. You'll find it's quirky, and there are a
significant number of bugs, but the developers are very responsive and
the user community is super-helpful.

Regarding debit and credit -- Americans especially are used to thinking
of "credit good, debit bad", because when you get a credit on your Visa
account that is favorable to you.

But GnuCash treats debits and credits as accountants do, and IMHO that's
a good thing -- it's one of the major factors in why I switched to
GnuCash a year ago.

Cash and bank accounts are among your assets, right?  Well, to
accountants an asset is a debit. A liability (such as your Visa account)
is a credit, and your net worth (same as equity) is also a credit.
Debits must always equal credits, and therefore

Assets (Debits) = Liabilities + Equity (Credits)

Income increases your net worth, which is a credit, and therefore income
is also a credit. Expenses reduce your net worth, and therefore expenses
are the opposite of credits, i.e. debits. That equation can be expanded
a bit, to

Assets (Debits) = Liability + Equity + (Income-Expenses) (credits)

Let's say you owe $1800 on your Visa account. That's an $1800 credit
balance on your books. If you pay $1100, you reduce your Visa balance (a
credit) to $700, and therefore you are debiting your Visa balance by
$1100. You are reducing your bank account (an asset, and therefore a
debit) by $1100, and therefore you are crediting your bank account by $1100.

When you return a $50 purchase, you're reducing (debiting) your Visa
balance $50 and also reducing (crediting) an asset account or an expense
account by $50. Why, then, do we think of "getting a credit" on our Visa
account in that situation? Because, unknowingly, we're using the
language from the viewpoint of the bank, not our own viewpoint. To the
bank, your Visa balance is an asset, and therefore a debit. That $50
return reduces the amount you owe them, and therefore reduces their
debit account, which makes it a credit on _their_ books. Their point of
view is exactly opposite to yours, because transactions that increase
their net worth reduce yours, and vice versa.

Now, all of that said, though you haven't done anything wrong in your
settings, you can set a preference to change "debits" and "credits" to
"deposits" and "withdrawals" for your bank accounts, and make
corresponding change for the other accounts.  Under Edit » Preferences »
Accounts, remove the tick mark for "use formal accounting labels". But
now that you know how things work, you may not feel the need to change them.

--
Regards,
Stan Brown
Tompkins County, New York, USA
http://BrownMath.com
http://OakRoadSystems.com
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Re: [GNC] new to gnucash

Stephen M. Butler
In reply to this post by Adrien Monteleone-2
On 1/5/19 1:53 PM, Adrien Monteleone wrote:
> Nothing counter-intuitive about it. It’s a matter of perspective.

And remembering.  I have to ask my wife each and every time -- even when
I wrote my earlier reply!  I'm thinking I need to hang a sign on the wall:

    DEBITS:  Assets, Expenses

    CREDITS:  Liabilities, Capital/Equity, Revenue

    Debits on the left side.  Credits on the right side.   Right side is
toward the Kitchen!

That last piece is just for me.  Your kitchen might be someplace else. 
That just keeps me from picking the other right side.

--Steve


>
> People are used to hearing the bank telling them that putting money in their account is a ‘credit’ to their account. That’s correct for the bank, because your account is their liability. Increasing a liability is done with a credit.
>
> But in your books, that account is an asset, which is increased by a debit.
>
> Regards,
> Adrien
>
>> On Jan 5, 2019, at 10:57 AM, Michael Hendry <[hidden email]> wrote:
>>
>>> On 5 Jan 2019, at 16:41, Mike Kerstetter <[hidden email]> wrote:
>>>
>>> Hello all. I'm brand new to gnucash. I want it to do just the basics of keeping a register and reconciliation of a couple bank and credit card accounts. I had Money Sunset Deluxe and currently have Quicken (which is now charging a yearly subscription). I'm muddling through setting up my accounts and I am baffled at the seemingly backward credit and debit columns in the register. A deposit to my Checking (or payment to my credit card account) shows up under "DEBIT" and a charge to my accounts shows up under "CREDIT".  The balance is correct. Am I doing something wrong in my set-up?
>>>
>>> Thanks,
>>>
>>> Mike Kerstetter
>> Hi, Mike.
>>
>> Welcome to gnucash, and to the mysterious world of double-entry bookkeeping!
>>
>> No, you haven’t made a mistake, cash received by an account is regarded as a debit and cash paid as a credit.
>>
>> I’m not an accountant and I frequently have to chant “Debit the Receiver” to remind myself how it goes.
>>
>> No doubt one of the experts in the forum can point you in the direction of an explanation of this counter-intuitive situation, or you could try Googling.
>>
>> Michael
>>
>>
>>
>> _______________________________________________
>> gnucash-user mailing list
>> [hidden email]
>> To update your subscription preferences or to unsubscribe:
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