In your example, you would not credit Equity ("my owner account") when
you pay a bill. Crediting an equity account increases its balance, and
you don't own anything more than you did before you paid the bill. Your
equity in the business is the net of assets minus liabilities, but it's
quite rare that you would make any transaction in an equity account
directly. (The net of current-period income minus expenses is a special
kind of equity, often called Retained Earnings.)
No, you are misunderstanding what equity is in this case.He WOULD be increasing equity (of the business) by investing this additional amount (by personally paying a bill of the business)
Imagine that this were in TWO steps. Suppose he FIRST put the amount into the bank account of the business (the bank account that doesn't exist yet). Do you see that THIS (imaginary) transaction would be a debit to bank account (asset) and a credit to "owner's equity". He has invested this additional amount. Now SECOND, from this non-existent bank account he pays the bill. That's a debit to the appropriate expense account and a credit to the bank account.
The bank account doesn't exist yet but that's OK because we have a debit and a credit for the same amount (in this imaginary account) so those cancel out and it doesn't matter that no bank account (yet) We are left with a debit to the expense account and a credit to "owner's equity".
Michael D Novack _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
