40 lines
No EOL
2 KiB
Text
40 lines
No EOL
2 KiB
Text
{\rtf1\ansi\ansicpg1252\cocoartf949\cocoasubrtf460
|
|
{\fonttbl\f0\fmodern\fcharset0 Courier;}
|
|
{\colortbl;\red255\green255\blue255;}
|
|
\pard\tx560\tx1120\tx1680\tx2240\tx2800\tx3360\tx3920\tx4480\tx5040\tx5600\tx6160\tx6720\sl264\slmult1\ql\qnatural\pardirnatural
|
|
|
|
\f0\fs28 \cf0 The most confusing transaction in any ledger will be your equity account---\
|
|
because starting balances can't come out of nowhere.\
|
|
\
|
|
When you first start your ledger, you will likely already have money\
|
|
in some of your accounts. Let's say there's $100 in your checking\
|
|
account; then add a transaction to your ledger to reflect this amount.\
|
|
Where will money come from? The answer: your equity.\
|
|
\
|
|
@smallexample\
|
|
10/2 Opening Balance\
|
|
Assets:Checking $100.00\
|
|
Equity:Opening Balances\
|
|
@end smallexample\
|
|
\
|
|
But what is equity? You may have heard of equity when people talked\
|
|
about house mortgages, as ``the part of the house that you own''.\
|
|
Basically, equity is like the value of something. If you own a car\
|
|
worth $5000, then you have $5000 in equity in that car. In order to\
|
|
turn that car (a commodity) into a cash flow, or a credit to your bank\
|
|
account, you will have to debit the equity by selling it.\
|
|
\
|
|
When you start a ledger, you are probably already worth something.\
|
|
Your net worth is your current equity. By transferring the money in\
|
|
the ledger from your equity to your bank accounts, you are crediting\
|
|
the ledger account based on your prior equity. That is why, when you\
|
|
look at the balance report, you will see a large negative number for\
|
|
Equity that never changes: Because that is what you were worth (what\
|
|
you debited from yourself in order to start the ledger) before the\
|
|
money started moving around. If the total positive value of your\
|
|
assets is greater than the absolute value of your starting equity, it\
|
|
means you are making money.\
|
|
\
|
|
Clear as mud? Keep thinking about it. Until you figure it out, put\
|
|
@samp\{-Equity\} at the end of your balance command, to remove the\
|
|
confusing figure from the total.} |