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Carol Champagne's documenation updates.

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git-svn-id: svn+ssh://svn.gnucash.org/repo/gnucash/trunk@3253 57a11ea4-9604-0410-9ed3-97b8803252fd
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Dave Peticolas
2000-12-06 22:15:37 +00:00
parent a8dcedebc7
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1
AUTHORS
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@@ -50,6 +50,7 @@ Simon Britnell <simon.britnell@peace.com> patch to RPM spec
Christopher B. Browne <cbbrowne@hex.net> for perl and lots of scheme
Conrad Canterford <conrad@mail.watersprite.com.au> register bug fix
Bill Carlson <wwc@wwcnet.nu> performance improvements
Carol Champagne <carol@gnumatic.com> documentation
Graham Chapman <grahamc@zeta.org.au> for the xacc-rpts addon package
George Chen <georgec@sco.com> for MS-Money QIF's & fixes
Albert Chin-A-Young <china@thewrittenword.com> configure.in patch

8
doc/sgml/C/xacc-about.sgml
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@@ -356,6 +356,14 @@ provide an accurate Profit & Loss statement.
</GLOSSDEF>
</GLOSSENTRY>
<GLOSSENTRY>
<GLOSSTERM><email>carol@gnumatic.com</email> Carol
Champagne</GLOSSTERM>
<GLOSSDEF>
<PARA>documentation</PARA>
</GLOSSDEF>
</GLOSSENTRY>
<GLOSSENTRY>
<GLOSSTERM><email>grahamc@zeta.org.au</email> Graham
Chapman</GLOSSTERM>

12
doc/sgml/C/xacc-currencyhandling.sgml
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@@ -8,7 +8,7 @@
</PARA> <PARA>A <LINK LINKEND="XACC-DOUBLEENTRY">Double Entry
bookkeeping system</LINK> stores both values, and requires
that all transactions balance, as described in the <LINK
LINKEND="IDENTITY">Double Entry Identity.</LINK>
LINKEND="XACC-DOUBLEENTRYRULE">Rule of Double Entry Accounting.</LINK>
</PARA>
<PARA>When we introduce the notion of having multiple currencies,
@@ -58,10 +58,12 @@
</ITEMIZEDLIST>
</PARA>
<PARA>The engine links together all three of these values <ENVAR> (1.0, 150, 0.00667)</ENVAR> permanently and makes it impossible to
change one without changing another, so that the grand total is
always zero, thereby guaranteeing satisfaction of the <LINK LINKEND="IDENTITY">double entry accounting
identity.</LINK>
<PARA>The engine links together all three of these values <ENVAR>
(1.0, 150, 0.00667)</ENVAR> permanently and makes it impossible to
change one without changing another, so that the grand total is always
zero, thereby guaranteeing satisfaction of the <LINK
LINKEND="XACC-DOUBLEENTRYRULE">rule of double entry accounting.</LINK>
</PARA>
</SECT1>

397
doc/sgml/C/xacc-doubleentry.sgml
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@@ -1,218 +1,261 @@
<ARTICLE ID="XACC-DOUBLEENTRY">
<ARTHEADER>
<TITLE>Understanding Double Entry Accounting</TITLE>
<TITLE>Understanding Double-Entry Accounting</TITLE>
</ARTHEADER>
<SECT1 ID="XACC-DOUBLEDEF">
<TITLE> What is Double-Entry Accounting?</TITLE>
<PARA>
You've probably heard the saying, "Money doesn't
grow on trees." It means that money must come from
somewhere---it doesn't just "appear." Double-entry accounting is
a method of record-keeping that lets you track just
<emphasis>where</emphasis> your money comes from and <emphasis>
where</emphasis> it goes. </para>
<para> Using double-entry means that money is never gained nor lost---it
is always transferred from somewhere (a source account) to
somewhere else (a destination account). In GnuCash, this
transfer is known as a <EMPHASIS>transaction</emphasis>, and each
transaction requires at least two accounts. </para>
<para> An <emphasis>account</emphasis> in GnuCash is a record for
keeping track of what you own, owe, spend or receive. For
example, if you pay a phone bill with a check, money transfers
from checking to the phone company. In GnuCash, this is a
transaction transferring money from a checking account to a phone expense
account. You probably already think of your checking account as
a bank "account," but your expenses (such as phone bill) are
also "accounts" in GnuCash. </para>
<para>This double-entry concept has been around since the 13th century,
and its purpose has always been to reduce the likelihood of
data-entry errors. Fortunately, GnuCash makes it a lot easier
to enter transactions than it was in those early days of
accounting!
</PARA>
<sidebar><title>Insider knowledge:</title>
<para>
Calling this
<EMPHASIS>double</EMPHASIS>-entry bookkeeping is a bit misleading;
it would be somewhat more accurate to call it <EMPHASIS>multiple-
</EMPHASIS>entry bookkeeping, since a transaction can affect more
than two accounts. Unfortunately, there's 700 years of
history of use of the term, which sufficiently discourages
changing it.
</para>
</sidebar>
</SECT1>
<SECT1>
<TITLE>Why Use Double Entry Accounting?</TITLE>
<TITLE>Why Use Double-Entry Accounting?</TITLE>
<PARA>
Double-entry accounting helps you avoid mistakes. This is why
professional accountants use it. If you are new to accounting,
it will help you organize your records and keep you from creating an
unauditable mess. If you are an experienced accountant, then you
probably won't want to imagine what life was like before it.
professional accountants use it. A double-entry
system provides a good check-and-balance benefit, by making
it easier for you to trace the source of any entry errors. </para>
<para>It also provides more useful and complete information to you than
you would get with just a single-entry "checkbook" approach. Because each
transaction contains both a source and destination, double-entry
provides valuable details that can be sorted and viewed in report
form later. Reports allow you to see things like how much money
you made for the year and where it all went, what your net worth
is, and what your taxes might be for the year.</para>
<para>GnuCash offers an advantage over traditional accounting packages
because it does a lot of the double-entry work for you while still
giving you the accuracy benefits of double-entry accounting.
</PARA>
</SECT1>
<SECT1 ID="XACC-DOUBLEDEF">
<TITLE> What is Double Entry Accounting?</TITLE>
<PARA>Double entry bookkeeping is an accounting methodology
introduced in the 13th century to to make sure that each
transaction and account is properly balanced.
It greatly reduces the likelihood of data-entry errors.
</PARA>
<PARA>A double-entry transaction is a transaction that contains
entries for two (or more) accounts that balance against one
another. One account is <EMPHASIS>debited</EMPHASIS> by an amount
equal to what the other is <EMPHASIS>credited.</EMPHASIS> By ensuring that
each transaction balances, a balanced set of accounts is
guaranteed. This doesn't totally prevent errors, but it does
eliminate the class of <EMPHASIS>"I forgot to enter
that part of the transaction"</EMPHASIS> errors.
In the course of maintaining large, complex sets of accounts with many
transactions, it is very easy to make errors that may go undetected for
a long time, and be appallingly difficult to track down, even when
double-entry bookkeeping is used.
</PARA>
</SECT1>
<SECT1 ID="XACC-DOUBLEENTRYRULE">
<TITLE> The Rule of Double-Entry Accounting</TITLE>
<PARA>The intuitive way of understanding double-entry
is as a transfer from one bank account to another,
where the amount taken out of one bank account must equal that
deposited in the other. This is effectively the "rule" of double entry
accounting; if you add something in to one account, you
have to subtract it from somewhere else.
When this is done regularly and consistently, this results in the
identity of accounting:
<ANCHOR ID="IDENTITY">
<ENVAR>Total of Debits = Total of Credits.</ENVAR>
</PARA>
<PARA>In a double-entry transaction, an equal amount of money is
always transferred from one account (or group of accounts) to
another account (or group of accounts). Accountants use the terms
<emphasis>debit</emphasis> and <emphasis> credit</emphasis> to
describe whether money is being transferred <emphasis>
to</emphasis> or <emphasis> from</emphasis> an
account. </para>
<PARA>There is another important aspect to double-entry that
should also be understood: to get the complete picture,
you must also track income and expense. When you deposit
your paycheck into your bank account, that money didn't
come 'from thin air'. Thus, when you record that bank deposit,
you shouldn't fool your accounting system about that thin air.
You should record your income in an income account:
the money that goes into your bank comes from your income
account. Once again, adding in one place subtracts from another.
By keeping track of your income and expenses, you can ultimately
keep track of your equity: Simply put, after years of earning and
spending, what you have left is what you got in, minus the
amount you spent.
</PARA>
<PARA>
(At this point, the documentation should discuss in greater
detail what happens when you spend money to buy a sofa
(except for money lost to taxes and shipping fees,
your net worth doesn't change much), and what happens as that sofa
wears out (depreciation). Again, these are transfers of money between
accounts. What's left over is the equity. Be sure to point out that
using doubble-entry against income+expense accounts is the correct way
to track the change over time.)
</PARA>
<PARA>
This is discussed in more detail in the
<LINK LINKEND="XACC-INCOMEEXPENSE">Income/Expense</LINK>
chapter.
</PARA>
<PARA><EMPHASIS>Insider knowledge:</EMPHASIS>
GnuCash treats "Debits" as positive values, and "Credits" as
negative values, and so the identity of accounting
simplifies to
<LITERAL>value<SUBSCRIPT>1</SUBSCRIPT> +
value<SUBSCRIPT>2</SUBSCRIPT> +
value<SUBSCRIPT>3</SUBSCRIPT> + ...
= 0</LITERAL>
Calling this
<EMPHASIS>double</EMPHASIS>-entry bookkeeping is a bit misleading;
it would be
somewhat more accurate to call it <EMPHASIS>multiple-</EMPHASIS>entry
bookkeeping. Unfortunately, there's 700 years of history of use
of the term, which sufficiently discourages changing it. (And you
thought parts of Unix were crufty and old!)
<para> Money is recorded in the debit column, which is the left
column, when it is being transferred <emphasis>to</emphasis> an
account. Money is recorded in the credit column, which is the
right column, when it is being transferred
<emphasis>from</emphasis> an account. For every transaction, the
total of debits (left column entries)
must equal the total of credits (right column entries).
</PARA>
<PARA><EMPHASIS>Insider knowledge:</EMPHASIS>
Bank statements are frequently written up from the
<EMPHASIS>bank's</EMPHASIS> perspective, which is
exactly <EMPHASIS>opposite</EMPHASIS> to
yours. For example, when you make a deposit at the bank,
you are giving them money which they promise to pay you back
someday. To the bank, your money is a debt: it is money that they
owe you. Thus, when you receive a statement from them,
you may find the columns to be oddly mislabelled: your
deposits are marked as 'debits', and withdrawls as 'credits'.
This practice is particularly common at older and more staid
banks.
</PARA>
<para> You don't have to use the terms "debit" and "credit" to use
GnuCash, however. GnuCash registers default to "common" column
headings such as "deposit" and "withdrawal"---if you are more
comfortable with those headings, use them. If you prefer the
credit and debit headings, you can change the column headings to
"use accounting labels" from the menu item
<guimenuitem>Settings|Preferences...General</guimenuitem>.</para>
</SECT1>
<para>The main concept to remember, regardless of terminology, is
that all transactions involve a transfer of some amount of money
from a source to a destination. For example, if you write a check
for $50 to buy groceries, you record that as a transfer of $50
from the checking account to the groceries expense account. In
accounting terms, this is a credit to checking and a debit to
groceries expense:</para>
<literallayout>
Debit Groceries 50
Credit Checking 50</literallayout>
<SECT1 ID="XACC-DOUBLEUSE">
<TITLE>Using Double Entry</TITLE>
<PARA>What about your paycheck? You can see that money goes into a bank
account, but where does it come from? In double-entry, the
money has to have a source, and the source of your paycheck is
an income account. So to enter the deposit of a $500 paycheck
in your checking account, you record a transfer of $500 from an
income account to a checking account. In accounting terms, this
is a credit to income and a debit to the bank account:</para>
<literallayout>
Debit Checking 500
Credit Income 500</literallayout>
<sidebar><title>Insider knowledge:</title>
<para>
Bank statements are often written up from the bank's
perspective, which is exactly <emphasis>opposite</emphasis> to
yours. When you deposit that paycheck in the bank, you are
giving the bank money which they promise to pay you back
someday. So to the bank, your deposit is a loan; it is money
they owe you. Since that money is a
<emphasis>source</emphasis> of funds to the bank, they show a
<emphasis>credit</emphasis> to your checking account when you
deposit money in it.</para>
</sidebar>
</SECT1>
<SECT1 ID="XACC-DOUBLEUSE">
<TITLE>Using Double-Entry in GnuCash</TITLE>
<para>Let's try an example that applies double-entry accounting to
using GnuCash. We will record the deposit of a $500 paycheck. </para>
<SECT2>
<title>Creating Accounts</title>
<para>
To enter a paycheck deposit, you first need to create two
accounts. The first account is a checking account. Click
the <guibutton>New</guibutton> button in the main window
toolbar to create a new account, then enter the following
account details in the dialog box that appears:
<literallayout>
Account Name: "Checking"
Account Type: Highlight "Bank"
Parent Account: Highlight "New top level account"
</literallayout>
</para>
<para> Click "OK" to complete setup, then create a second income
account. Click the <guibutton>New</guibutton> button again, and enter these
details in the dialog box:
<literallayout>
Account Name: "Salary"
Account Type: Highlight "Income"
Parent Account: Highlight "New top level account"</literallayout></para>
<sidebar><title>Insider knowledge:</title>
<para>
GnuCash provides several different types of accounts, discussed in
the <LINK LINKEND="XACC-ACCTYPES">Account Types </LINK>
section. Debits increase your asset and expense accounts, while
credits increase your income, liability and equity accounts.
Income and expense accounts are also discussed in more detail in
the <LINK LINKEND="XACC-INCOMEEXPENSE">Income/Expense</LINK>
section.</para></sidebar>
</sect2>
<SECT2>
<TITLE>Creating Transactions</TITLE>
<PARA>To create a double-entry transaction:
<PARA>To create a double-entry transaction for the paycheck deposit:
<ITEMIZEDLIST>
<orderedLIST>
<LISTITEM>
<PARA> Click on a box in the column marked <SCREEN>Transfer From</SCREEN>
on the left-hand side of the register.
A menu will drop down, listing all of the accounts from
which a transfer may be made.
<PARA> Open the Checking account register you just created by double-clicking
on the account name in the main window.
</PARA>
</LISTITEM>
<LISTITEM>
<PARA> Select one.
When you record the transaction, the double-entry will
automatically be made, and the transaction automatically
appear in all windows showing the transferred-from and the
transferred-to accounts.
<PARA>Tab to the Description field and enter "Paycheck Deposit."
</PARA>
</LISTITEM>
</ITEMIZEDLIST>
<LISTITEM>
<PARA>Tab to the Transfer field and select the Salary account from the
pull-down menu.
</PARA>
</LISTITEM><LISTITEM>
<PARA> Tab to the Deposit column and enter "500," then hit "Enter" to
record the transaction. Now your Checking account
shows a debit entry of 500.
</PARA>
</LISTITEM>
<LISTITEM>
<PARA>Highlight the transaction again and click the "Jump" toolbar
button to see the transaction's effect on the Salary
account. Notice that in the Salary account, you now
have a matching credit entry of 500 that GnuCash entered
automatically for you.
</PARA>
</LISTITEM>
</orderedLIST>
</PARA>
</SECT2>
<SECT2>
<TITLE>Changing Transactions</TITLE>
<PARA>To <EMPHASIS>change</EMPHASIS> a double-entry transaction,
simply edit the transaction in any window in which it
appears. Any changes made will be automatically reflected in both
accounts and all windows displaying the transaction.
<PARA>
What if you want to edit this transaction to increase the
paycheck deposit to $600? To <EMPHASIS>change</EMPHASIS> a
double-entry transaction, simply select the transaction in any
register in which it appears, then make your changes and
record the transaction. In this case, you can either edit the
transaction from the Checking account register or the Salary
account register. Any changes made will be automatically
reflected in both accounts and all windows displaying the
transaction.
</PARA>
<PARA>Similarly, when a double-entry transaction is deleted, the
"splits" will be deleted from both accounts, and balances will
automatically be recalculated for <EMPHASIS>both</EMPHASIS> accounts.
</PARA>
<PARA>To change the transfer account, simply select a new account
from the pull-down menu. When you record the transaction, it
will automatically be selected from the old account, and
inserted into the new account.
</PARA>
</SECT2>
</SECT1>
<SECT1 ID="XACC-SCRUBBING">
<TITLE> Scrubbing Clean</TITLE>
<PARA>GnuCash may be configured to be strict about double entry,
or you may configure it to be "loose."
In "loose" mode, you can create <EMPHASIS>unbalanced
transactions,</EMPHASIS> that is, transactions where the "splits"
don't balance to zero. That discards the validation that comes
from using the more strict double entry scheme, which is
probably not a really wise move. In effect:
<ITEMIZEDLIST>
<LISTITEM>
<PARA>If you aren't sure of what you're doing, you likely do
not want to discard the validation of <EMPHASIS>double entry,</EMPHASIS> as
this helps you keep your accounts balanced even when you're
not perfectly clear on this.
<PARA>
To change the transfer account, simply select a new account
from the pull-down menu. When you record the transaction, this
account change will be reflected in all affected accounts.
Similarly, when a double-entry transaction is deleted, entries
will be deleted from all affected accounts, and balances will
automatically be recalculated for those accounts.
</PARA>
</LISTITEM>
<LISTITEM>
<PARA>If you are an <EMPHASIS>accounting whiz,</EMPHASIS> you'll know that
it's <EMPHASIS>really important</EMPHASIS> to keep things in balance, and
again will prefer <EMPHASIS>double entry.</EMPHASIS>
</PARA>
</LISTITEM>
</ITEMIZEDLIST>
</PARA>
<PARA>But if you decide to "outsmart the system," and have a
number of unbalanced transactions, you'll probably want to
clean this up at some point. To clean up these unbalanced
transactions, you <EMPHASIS>Scrub</EMPHASIS> the account clean by choosing
<GUIMENU>Scrub</GUIMENU> from the window menu.
The process will examine each transaction; if the
transaction doesn't balance, a split entry will be created and
placed into an account named <EMPHASIS>Unbalanced.</EMPHASIS> You may then
review these splits and move them to their proper accounts.
</PARA>
<PARA><EMPHASIS>Warning: Functionality Changing...</EMPHASIS>
At present, control over whether GnuCash is "strict" or
"loose" is established at compile time, and defaults to
<EMPHASIS>strict.</EMPHASIS>
In the future, there will be no option of "looseness."
</SECT2>
</PARA>
</SECT1>
</sect1>
</ARTICLE>

16
doc/sgml/C/xacc-incomeexpense.sgml
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@@ -125,13 +125,15 @@ section deals with the more basic recording of incomes and expenses.
equals the total sum of the credits, $1,600.00.
</PARA>
<PARA>If, as with <EMPHASIS>GnuCash,</EMPHASIS> everything is forced onto one
column, so that <EMPHASIS>debits</EMPHASIS> are represented by positive
values, and <EMPHASIS>credits</EMPHASIS> are represented by negative values,
the income/expense accounts do a slightly non-intuitive thing
and you see incomes as <EMPHASIS>negative</EMPHASIS> values. That <EMPHASIS> appears</EMPHASIS> contrary to intuition, but is nonetheless
necessary in order for the
<LINK LINKEND="IDENTITY">double-entry bookkeeping identity to hold true.</LINK>
<PARA>If, as with <EMPHASIS>GnuCash,</EMPHASIS> everything is forced
onto one column, so that <EMPHASIS>debits</EMPHASIS> are represented
by positive values, and <EMPHASIS>credits</EMPHASIS> are represented
by negative values, the income/expense accounts do a slightly
non-intuitive thing and you see incomes as
<EMPHASIS>negative</EMPHASIS> values. That <EMPHASIS>
appears</EMPHASIS> contrary to intuition, but is nonetheless necessary
in order for the <LINK LINKEND="XACC-DOUBLEENTRYRULE">double-entry accounting
rule to hold true.</LINK>
</PARA>
<PARA>Income and expense accounts are also special, in