Philosophical Question (GnuCash)

[Derek Neighbors]

We generally get this question a lot in GNU Enterprise.  We had one of the
senior accountants on the project write an intro into general ledger
theory.  It is quite readable and can be found here:

http://www.gnuenterprise.org/packages/docs/general_ledger_theory1.html

-Derek
Liberty Young said:
> Two of the biggest mental obstacles to understanding double entry
> accounting are the words
> credit
> debit
>
> Many of us in my accounting 101 class had a hard time coming to grips
> with that. Credits don't mean you put money in, debits don't mean you
> took money out.
> A lot of the students had a hard time understanding that a debit of a
> cash account could mean  putting money into a cash account.
>
> Jim's explanation is good, but it glosses over the use of the words
> credit and debit, which trips up many of us who are accounting and the
> use of double entry accounting.
>
> On Sat, 2003-02-01 at 15:33, Jim wrote:
>> The simple explanation to double entry accounting is that for every
>> debit you enter, you must enter a corresponding credit.  If you debit
>> an asset account for $100.00, you must make one or more credit entries
>> matching the $100.00 debit.
>>
>> e.g. - you transfer $100.00 into cash.  That cash has to have come
>> from somewhere.  It could be a transfer from another asset account,
>> which would necessitate a credit to that other asset account, or it
>> could be offset by a credit to a liability account, such asaccounts
>> payable or owner equity.
>>
>> The reasoning for this is simple - assets must always equal
>> liabilities plus equity.
>>
>> On Sat, 2003-02-01 at 12:44, David Mandala wrote:
>> > You might want to get a book on double entry bookkeeping. Any
>> accountant knows how to set it up and make entries. It is not
>> intuitive without so type of training. That said double entry
>> bookkeeping is how most businesses track their finances. Single
>> entry is frowned up in accounting circles.
>> >
>> > Cheers,
>> >
>> > Davidm
>> >
>
>
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