On 8/31/2022 4:08 AM, Gyle McCollam wrote:
That is an "L" not an "I" in the equation at the end of my email: "A=I (+/-)
Eq" to get it to equal.
There are only three FUNDAMENTAL account types, asset, liability, and
equity. The confusion about the equation is perhaps because our computer
automatically gives us SOME totals but not others.
Thus the equation is really............
(sum of accounts of type asset) = (sum of accounts of type equity) +
(sum of accounts of type liability) AND there is "sense reversal"
implied because we are really saying simply
total debits = total credits as opposed to arithmetic equality (since
debit and credit have opposite "sense")
Like I said, BOTH accounts of type income and accounts of type expense
are actually of type equity. They did not originally exist (say in the
14th Century) and the opposite side of transactions that were items of
income or items of expense were immediately entered against equity.
When you ask gnucash to produce a Balance Sheet the net of those
accounts (income accounts and expense accounts) IS there under the
pseudo account "retained gains" or "retained losses" as part of the
equity total.
Michael D Novack
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