Account Types
GnuCash supports a number of different account types. You should
always choose the type that is appropriate for what you want to
record. If you're not sure, the explanations below should help you
decide.
- Cash
- The cash account type is used to denote the cash
that you store in your wallet, shoebox, piggybank, or
mattress.
- Bank
- The Bank account type denotes a savings or
checking account held at a bank or other financial
institution.
- Such accounts sometimes bear interest.
- Credit
- The Credit card account is used to denote credit
card accounts, whether involving floating lines of credit as
with VISA, MasterCard, or Discover, as well as others like
American Express that do not permit you to maintain
continuing balances.
- The introduction of Check
Cards where payments are withdrawn directly from a
checking account makes the selection less clear; it is
probably more appropriate to treat a "Check Card" as a
Bank account, as it does withdraw amounts directly from
such an account, not really involving any granting of
credit.
- Note the ambiguity of AMEX and Check Cards. This shows that
deciding where to put accounts is not an exact science.
- Asset, Liability
- Asset and Liability accounts are used for
tracking things that are of value, but that are not so
directly translated into cash .
- For instance, you might collect the costs of purchasing a
house into an asset account entitled My House, or the
cost of a car into My Car, or collect together the
value of your Computer Equipment.
- And the home mortgage or car loan would be represented by
liability accounts, Home Mortgage and Car
Loan, to be drawn down as payments are made on these
loans.
- If you hold assets for business purposes, their decline
in value over time might be treated as a deduction for tax
purposes, that deduction being called Depreciation.
- On the other hand, if you own assets that
appreciate in value over time, such as real estate,
collectibles like paintings, and investments like shares in
companies, you may see them appreciate in value, and have to
recognize, for tax purposes, what are called Capital Gains.
- Stock, Mutual Fund
- Securities that you invest in are a form of asset that
are normally acquired with the express purpose of receiving
income either in the form of dividends, interest, or Capital Gains. There are a
multitude of securities markets around the world, and
securities that are widely enough traded can have pretty
concrete values that may be analyzed on a day-to-day
basis.
-
Stock and Mutual Fund accounts are typically tracked in
registers having three main columns:
- Price
- Number of shares
- Cost
-
In order to get useful information out of the
register, it is necessary to have multiple "views" on the
data so that you may assess such things as:
- Total Values by security
- Gains/Losses by security
- Return On Investment rates by security
- More details may be found in the Stock Ticker section.
- Income,
Expense
- Income and Expense account types are used to
record income and expenses.
- For example, if you deposit a paycheck in your bank account, you
should mark it as a transfer from an 'income' account type.
- Marking income in this way helps balance the books: the change in your
net worth in the course of a few ekks, a few months, or a year, should
exactly equal your income (minus expenses) for the same period.
- The value stored in the bank account contributes to your 'net worth';
whereas the income contributes to your 'profits'.
- Equity
- Equity accounts are used to
store the opening balances when you first start using GnuCash
(or start a new accounting period).
- Assuming that you've had a bank
account far longer than you've been using GnuCash, and assuming you
don't want to type in old transactions, you will want to type in a
non-zero opening balance into your bank account. This opening balance
should be marked as a transfer from an account of type 'equity'.
- Alternately, if you close and reopen all your books at the end of every
quarter/year, the 'equity' will be your net-worth at the begining of the
period: it equal all assets minus all liabilities.
- As time goes by,
you will have both income and expenses.
-
- Currency
- Currency Accounts are used for trading
currencies.
- In most ways, they behave like stocks, except that the
only way that "income" may be gotten from them is from
fluctuations in the relative values of currencies. Note that
transfers cannot be made directly between two accounts
denominated in different currencies. Such transfers may only
be made into currency trading accounts.
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