What I was referring to is the checking account I use for my business. When I make what the bank sees as a deposit, I need to account for it in my books.
My books includes an asset account called Business Checking. Wouldn't that deposit be considered a credit? Based on what you've described, it sounds like you'd treat it as a debit. I need to account for moving money from my personal checking account into the business account. I entered it in to my personal check register. Now I need to separately account for it in the business books. On January 17, 2020 3:50:03 PM CST, Adrien Monteleone <adrien.montele...@lusfiber.net> wrote: >Speak to a local CPA for details for your situation and jurisdiction, >but from what you can find in a basic accounting text book, generally >both contributions (capital investments) and distributions (draws) are >equity accounts. > >The tree would look something like this: > >Equity >|_Opening Balances (already exists) > >|_Owner’s Equity > |_Investments > |_Capital Investments > |_Reimbursements > |_Earnings > |_Dividends > |_Draws > |_Owner’s Draws > >|_Retained Earnings (already exists, either actually, or virtually) > >(there might be other types of Draws or Earnings which is why I show >those parent accounts with a specific child. You could just leave the >child accounts off if you don’t have need for them, and refactor later >if you do. Other types of Investments might also include land, >buildings, equipment, product, etc.) > >All of these accounts should be created as type ‘Equity’ > > >A sample transaction when you make contributions to your business would >be: > >Dr. Cash/Checking, etc. >Cr. Equity:Owner’s Equity:Investments:Capital Investments > > >A sample transaction when you take a draw would be: > >Dr. Equity:Owner’s Equity:Draws:Owner’s Draws >Cr. Cash/Checking, etc. > > >If this is a distribution of profits, (and not just a draw) then you’d >use the Dividends account: > >Dr. Equity:Owner’s Equity:Earnings:Dividends >Cr. Cash/Checking, etc. > > >This will keep all of these transactions in the Equity part of the >tree. They will not affect Income or Expenses, but they will affect >assets as money is put into the business or taken out. > >Note that Capital Investments don’t decrease as you take Draws or >Dividends, and nothing ever decreases the Draws or Dividends, but all >three affect the parent account "Owner’s Equity” balance appropriately. >The Earnings & Draws parts of the tree will generally have ’positive’ >sign balances if you aren’t reverse balancing accounts, or ’negative’ >sign balances if you are. (for all credit accounts) This is because >those two accounts are ‘contra’ accounts from normal Equity type >accounts, meaning they will have the opposite balance expected for >Equity, that is, a debit balance is normal, instead of a credit balance >as normal. > >But certainly, how this is setup or done is entirely dependent on your >exact form of your business and legal situation and requirements, which >is why you should really, really, really get a local CPAs advice. > >Regards, >Adrien > >p.s. - though it may not matter since you might not be using such a >transaction, your below example of depositing money into a checking >account wouldn’t be a credit to it. As you are increasing an asset, it >would be a debit for that side of the transaction. > > >> On Jan 17, 2020 w3d17, at 3:17 PM, Don Ireland ><gnuc...@donireland.com> wrote: >> >> I'm having trouble figuring out the best way to handle owner >contributions and distributions in gnucash. I understand them in >concept but I'm just confused as to how the accounts get set up. >> >> My 1st thought was to create an asset account called Owner >Contributions and another called Distributions. But then when when I >take Distributions, unless I take the funds from this contributions >account, it'll just continue to grow. >> >> Plus when I credit this account but deposit the money in the checking >account, gnucash would see both as credits. So then I thought maybe >it's a liability account but that still leaves the question as to >separating the contributions and distributions. >> >> Do I create one account called Contributions & Distributions and >credit/debit this single account? Is it a liability account? >> Don Ireland > >_______________________________________________ >gnucash-user mailing list >gnucash-user@gnucash.org >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. >----- >Please remember to CC this list on all your replies. >You can do this by using Reply-To-List or Reply-All. Don Ireland _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org 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. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
