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Double entry booking is complicated but it pays off to learn if also for personal finance because errors are much less likely than with a spreadheet.
by holri 6y ago
Double entry booking is complicated but it pays off to learn if also for personal finance because errors are much less likely than with a spreadheet.
- ahnick 6y agoThis is commonly stated, but I found it relatively straightforward once I saw the extended accounting equation (https://en.wikipedia.org/wiki/Accounting_equation https://en.wikipedia.org/wiki/Accounting_equation) and knew every entry needed a corresponding entry to make the equation balance. Assets = Liabilities + Equity + (Income - Expenses) For some reason the (Income - Expenses) part gets left off in many introductory explanations of the accounting equation. I think that leads to a lot of confusion about how to treat Income and Expense accounts in programs like GnuCash for newcomers to double entry accounting.
- Jorge1o1 6y agoI agree this is important to understanding double-entry accounting. Keep in mind that the Income - Expenses gets elided because the Retained Earnings go towards Equity
- TeMPOraL 6y agoI wish somebody did an explainer of all this, not just for dummies, but for us European dummies. I've approached this topic multiple times, and I always get confused by all these Liquidities, Equities, Accounts Payables, Accounts Receivables, Commodities, and how come any article trying to explain any of that starts talking about stock trading.