GnuCash Tutorial and Concepts Guide

Carol Champagne Chris Lyttle

GnuCash Documentation Team <chris@wilddev.net>

Jon Lapham
GnuCash Documentation Team <lapham@extracta.com.br> This Guide contains a tutorial for using GnuCash and describes the concepts behind GnuCash. Copyright 2003-2004 on !apham Copyright 2002 Chris !yttle Copyright 200" Carol Champagne and Chris !yttle #ermission is granted to copy$ distribute and%or modify this document under the terms of the G&' (ree Documentation !icense )G(D!*$ +ersion "." or any later ,ersion published by the (ree -oft.are (oundation .ith no /n,ariant -ections$ no (ront-Co,er Te0ts$ and no 1ac2-Co,er Te0ts. 3ou can find a copy of the G(D! at this lin2 or in the file C4#3/&G-D4C- distributed .ith this manual. This manual is part of a collection of G&456 manuals distributed under the G(D!. /f you .ant to distribute this manual separately from the collection$ you can do so by adding a copy of the license to the manual$ as described in section 7 of the license. 5any of the names used by companies to distinguish their products and ser,ices are claimed as trademar2s. 8here those names appear in any G&456 documentation$ and the members of the G&456 Documentation #ro9ect are made a.are of those trademar2s$ then the names are in capital letters or initial capital letters. D4C'56&T :&D 54D/(/6D +6;-/4&- 4( T<6 D4C'56&T :;6 #;4+/D6D '&D6; T<6 T6;5- 4( T<6 G&' (;66 D4C'56&T:T/4& !/C6&-6 8/T< T<6 (';T<6; '&D6;-T:&D/&G T<:T= ". D4C'56&T /- #;4+/D6D 4& :& >:- /-> 1:-/-$ 8/T<4'T 8:;;:&T3 4( :&3 ?/&D$ 6/T<6; 6@#;6--6D 4; /5#!/6D$ /&C!'D/&G$ 8/T<4'T !/5/T:T/4&$ 8:;;:&T/6- T<:T T<6 D4C'56&T 4; 54D/(/6D +6;-/4& 4( T<6 D4C'56&T /- (;66 4( D6(6CT- 56;C<:&T:1!6$ (/T (4; : #:;T/C'!:; #';#4-6 4; &4&/&(;/&G/&G. T<6 6&T/;6 ;/-? :- T4 T<6 A':!/T3$ :CC';:C3$ :&D #6;(4;5:&C6 4( T<6 D4C'56&T 4; 54D/(/6D +6;-/4& 4( T<6 D4C'56&T /8/T< 34'. -<4'!D :&3 D4C'56&T 4; 54D/(/6D +6;-/4& #;4+6 D6(6CT/+6 /& :&3 ;6-#6CT$ 34' )&4T T<6 /&/T/:! 8;/T6;$ :'T<4; 4; :&3 C4&T;/1'T4;* :--'56 T<6 C4-T 4( :&3 &6C6--:;3 -6;+/C/&G$ ;6#:/; 4; C4;;6CT/4&. T</- D/-C!:/56; 4( 8:;;:&T3 C4&-T/T'T6- :& 6--6&T/:! #:;T 4( T</- !/C6&-6. &4 '-6 4( :&3 D4C'56&T 4; 54D/(/6D +6;-/4& 4( T<6 D4C'56&T /- :'T<4;/B6D <6;6'&D6; 6@C6#T '&D6; T</- D/-C!:/56;C :&D 2. '&D6; &4 C/;C'5-T:&C6- :&D '&D6; &4 !6G:! T<64;3$ 8<6T<6; /& T4;T )/&C!'D/&G &6G!/G6&C6*$ C4&T;:CT$ 4; 4T<6;8/-6$ -<:!! T<6 :'T<4;$ /&/T/:! 8;/T6;$ :&3 C4&T;/1'T4;$ 4; :&3 D/-T;/1'T4; 4( T<6 D4C'56&T

4; 54D/(/6D +6;-/4& 4( T<6 D4C'56&T$ 4; :&3 -'##!/6; 4( :&3 4( -'C< #:;T/6-$ 16 !/:1!6 T4 :&3 #6;-4& (4; :&3 D/;6CT$ /&D/;6CT$ -#6C/:!$ /&C/D6&T:!$ 4; C4&-6A'6&T/:! D:5:G6- 4( :&3 C<:;:CT6; /&C!'D/&G$ 8/T<4'T !/5/T:T/4&$ D:5:G6- (4; !4-- 4( G44D8/!!$ 84;? -T4##:G6$ C45#'T6; (:/!';6 4; 5:!('&CT/4&$ 4; :&3 :&D :!! 4T<6; D:5:G6- 4; !4--6- :;/-/&G 4'T 4( 4; ;6!:T/&G T4 '-6 4( T<6 D4C'56&T :&D 54D/(/6D +6;-/4&- 4( T<6 D4C'56&T$ 6+6& /( -'C< #:;T3 -<:!! <:+6 166& /&(4;56D 4( T<6 #4--/1/!/T3 4( -'C< D:5:G6-. Feedback To report a bug or ma2e a suggestion regarding this pac2age or this manual$ follo. the directions at the G&456 1ug Trac2ing -ystem. Revision History ;e,ision GnuCash Tutorial and Concepts Guide +".D.4 on !apham <lapham@extracta.com.br> GnuCash Documentation Team ;e,ision GnuCash Tutorial and Concepts Guide +".D.3 on !apham <lapham@extracta.com.br> GnuCash Documentation Team ;e,ision GnuCash Tutorial and Concepts Guide +".D.2 on !apham <lapham@extracta.com.br> GnuCash Documentation Team ;e,ision GnuCash Tutorial and Concepts Guide +".D." Chris !yttle <chris@wilddev.net> GnuCash Documentation Team ;e,ision GnuCash Tutorial and Concepts Guide +".D.0 Chris !yttle <chris@wilddev.net> GnuCash Documentation Team ;e,ision GnuCash 'ser Guide +".7.E Chris !yttle <chris@wilddev.net> GnuCash Documentation Team ;e,ision GnuCash 'ser Guide +".7.0 Carol Champagne <carol@io.com> GnuCash Documentation Team 4ctober 200" une 2002 an 2003 5ay 2003 :ug 2003 :ug 2003 ""th :pril 2004

Table of Contents ". 4,er,ie. /ntroduction (eatures 6asy to 'se Trac2s 3our /n,estments /nternational -upport 1usiness -upport :ccounting (eatures 8hatFs &e. in ,".D :bout this 1oo2 Top Ten ;easons to 'se GnuCash /nstallation 2. The 1asics :ccounting Concepts The E 1asic :ccounts The :ccounting 6Guation Double 6ntry Data 6ntry Concepts (iles$ :ccounts and Transactions Double 6ntry The GnuCash /nterface Create a ne. set of accounts Tip of the Day :ccount Tree 8indo. :ccount ;egister 8indo. Tool 1ar 1uttons 5enu /tems 5enu -hortcuts -etting #references :ccounts 1usiness General /nternational 4n-line 1an2ing ;econcile ;egister ;egister Colors -cheduled Transactions Getting <elp <elp 5anual 8eb :ccess Topic -earch Creating and -a,ing (iles /mporting A/( (iles 1ac2ing 'p and ;eco,ering Data 1ac2up file ).0ac* !og file ).log* !oc2 files ).!&? and .!C?* (ile 5anagement #utting /t :ll Together 3. :ccounts 1asic :ccounting Concepts 1alance -heet :ccounts /ncome and 60pense :ccounts GnuCash :ccounts

1alance -heet :ccounts /ncome and 60pense :ccounts #utting /t :ll Together -imple 60ample The 1asic Top !e,el :ccounts 5a2ing -ub-:ccounts 4. Transactions 1asic Concepts The :ccount ;egister -imple Transaction -plit Transaction (eatures of the :ccount ;egister Choosing a ;egister -tyle 'sing 6ntry -hortcuts ;econciliation ;econcile 8indo. -cheduled Transactions Creating from the !edger Creating from the 6ditor #utting /t :ll Together 4pening 1alances :dditional Transaction 60amples E. Chec2boo2 -etting up :ccounts 6ntering Deposits 6ntering 8ithdra.als :T5%Cash 8ithdra.als ;econciling 3our :ccounts #utting /t :ll Together 7. Credit Cards Concepts -etting 'p :ccounts -imple -etup Complete -etup 6ntering Charges 6ntering #ayments #utting /t :ll Together #urchases ;efund /nterest Charge ;econciliation #ayment H. !oans 1asic Concepts Terminology -etting 'p :ccounts <ouse 5ortgage )<o.-To* Calculations 60ample= 5onthly #ayments 60ample= !ength of !oan :d,anced= Calculation Details 5issing !oan Documentation D. /n,estments 1asic Concepts Terminology Types of /n,estments

-etting 'p :ccounts #redefined :ccounts Custom :ccounts 60ample /nterest 1earing :ccounts :ccount -etup 60ample -etup -toc2 #ortfolio -etup #ree0isting -toc2s 60ample -toc2 :ccount 1uying &e. /n,estments -etting -toc2 #rice /nitial #rice 6ditor -etup -etting -toc2 #rice 5anually -etting -toc2 #rice :utomatically Displaying -toc2 +alue 5a2ing -toc2 +alue ;eports Di,idends -elling -toc2s 60ample To-do I. Capital Gains 1asic Concepts 6stimating +aluation :ccount -etup 60ample 'nrealiJed Gains -elling Caution about +aluation Ta0ation "0. 5ultiple Currencies 1asic Concepts :ccount -etup GnuCash Currency -upport -etting /nternational #references ;ecording Currency 60change )<o.-To* ;ecording #urchases in a (oreign Currency )<o.-To* Trac2ing Currency /n,estments )<o.-To* ;econciling -tatements in a (oreign Currency )<o.-To* 'pdating 60change ;ates )<o.-To* #utting /t :ll Together )60amples* "". Depreciation 1asic Concepts 6stimating +aluation Depreciation -chemes :ccount -etup 60ample "2. :ccounts ;ecei,able 4,er,ie. of 1usiness (eatures 1asic Concepts /nitial -etup :ccount -etup ;egister 3our Company -ystem Components Customers &e. (ind and 6dit

/n,oices &e. 6dit #ost (ind #rint :ssign -tarting /n,oice &umber Customer obs #rocess #ayment Changing the /n,oice :ppearance "3. :ccounts #ayable 1asic Concepts /nitial -etup :ccount -etup ;egister 3our Company in GnuCash -ystem Components +endors &e. (ind and 6dit 1ills &e. 6dit #ost (ind +endor obs #rocess #ayment "4. #ayroll 1asic Concepts :ccount -etup #rotocol -tep "= Deductions list -tep 2= Create the Transaction 5ap -tep 3= #ay the 6mployee -tep 4= #ay the Go,ernment 60ample 1uild #rotocol #ay an 6mployee #ay the Go,ernment :. 5igration Guide 'sing :ccounts ,s. Categories 4rganiJation of A/( (iles )Discussion* Common Duplication /ssues )Discussion* Chec2ing A/( Data )Discussion* Con,erting @5! GnuCash (ile 1. (reGuently :s2ed Auestions -ources of /nformation A= 8hereFs the (:AK A= :re there mailing lists for GnuCashK A= /s there a searchable archi,e for the mailing listsK A= :re there other means of obtaining support for GnuCashK General /nformation A= Can / run GnuCash on 8indo.sK A= / heard it is too hard to compile GnuCashL A= /s there a batch mode )non-interacti,e* a,ailable for GnuCash$ for building reports$ etcK A= Can multiple people access the same datafile in GnuCashK A= 8hy is GnuCash .ritten in CK

A= 8hy donFt you re.rite GnuCash in programming language 0yJ so that / can contribute easilyK A= / really .ant feature @3B but GnuCash doesnFt ha,e it. <o. do / get it addedK A= /s there a .eb interface a,ailable for GnuCashK A= <o. can / pro,ide security for GC data using C(-$ etc.* A= <o. can / contribute to the GnuCash pro9ectK A= / thin2 / found a bug. <o. do / report itK 'sing GnuCash A= <o. can / mo,e the transactions from account : into account 1$ thus combining themK A= /s it possible to merge t.o gnucash filesK A= <o. can / sa,e a template of my account structureK A= 8hen / search for customers )or anything else for that matter*$ ho. can / return a list of e,erythingK A= <o. can / record a transaction on different dates )actual date and ban2 date*K :ccounting A= <o. do / treat ta0esK :s an account payable or as an e0penseK C. Contributed :ccount Trees '? +at D. G&' (ree Documentation !icense 0. #;6:51!6 ". :##!/C:1/!/T3 :&D D6(/&/T/4&2. +6;1:T/5 C4#3/&G 3. C4#3/&G /& A':&T/T3 4. 54D/(/C:T/4&E. C451/&/&G D4C'56&T7. C4!!6CT/4&- 4( D4C'56&TH. :GG;6G:T/4& 8/T< /&D6#6&D6&T 84;?D. T;:&-!:T/4& I. T6;5/&:T/4& "0. ('T';6 ;6+/-/4&- 4( T</- !/C6&-6 :ddendum List of Tables H.". 1uying a <ouse -plit Transaction D.". -elling -toc2 -plit Transaction -cheme I.". Turning an :ccrued Gain into a ;ealiJed Gain "".". !inear Depreciation -cheme 60ample "".2. Geometric Depreciation -cheme 60ample "".3. -um of Digits Depreciation -cheme 60ample "4.". Transaction 5ap "4.2. Transaction 5ap for 6mployee "

Chapter 1 !vervie"
Table of Contents /ntroduction (eatures 6asy to 'se Trac2s 3our /n,estments /nternational -upport 1usiness -upport :ccounting (eatures 8hatFs &e. in ,".D :bout this 1oo2

Top Ten ;easons to 'se GnuCash /nstallation

#ntroduction
GnuCash is the personal finance soft.are pac2age made for you. /t is ,ersatile enough to 2eep trac2 of all your financial information$ from the simple to the ,ery comple0. /t is one of the fe. financial soft.are pac2ages that supports global currencies$ and it is the only open-source program of its 2ind. 1est of all$ GnuCash is easy to learn and useL -o$ .hat can GnuCash do for youK /t can 2eep trac2 of your personal finances in as much detail as you prefer. /f you are 9ust starting out$ use GnuCash to 2eep trac2 of your chec2boo2. 3ou may then decide to trac2 cash as .ell as credit card purchases to better determine .here your money is being spent. 8hen you start in,esting$ you can use GnuCash to help monitor your portfolio. 1uying a ,ehicle or a homeK GnuCash .ill help you plan the in,estment and trac2 loan payments. /f your financial records span the globe$ GnuCash pro,ides all the multiple-currency support you need. 8hile GnuCash is .ell suited for personal finances$ it is also po.erful enough for business use. There are many business features$ from integrated accounts recei,able and payable systems$ to ta0 table construction. 3ou .ill find these and the many other business features surprisingly po.erful and easy to use.

Features
$asy to %se
GnuCash has been designed from the ground up to be easy to use. 8ithin a matter of minutes you .ill be able to enter your personal finance information and generate color graphs that represent your financial status. /f you can use the register in the bac2 of your chec2boo2 - you can use GnuCashL Type directly into the register$ tab bet.een fields$ and use Guic2-fill to automatically complete transactions. The interface is customiJable from .ithin the application itself.

Easy to Use Menus= GnuCash menus conform .ith the G&456 <uman /nterface Guidelines. This means that they are simple and similar in appearance to many other G&456 applications. Documentation= GnuCash has built in <elp and e0tensi,e 'ser Guide documentation. Import Methods= GnuCash supports many .ays to input transactions besides manual entry. /f you can access your ban2 accounts on-line$ this is especially useful$ as one of the follo.ing e0port methods is supported by most ban2s. 3ou .ill spend less time entering data and more time analyJing results.

Quicken Import File (QIF)= /mport Auic2en A/( style files$ a popular file format .ith many commercial personal finance soft.are pac2ages. Open Financial Exchange (OFX)= GnuCash is the first free soft.are application to support the 4pen (inancial 60change protocol. 5any financial institutions are mo,ing to.ards this format. ome !anking "omputer Inter#ace ( !"I)= GnuCash is the first free soft.are application to support the German <ome 1an2ing Computer /nterface protocol. This protocol includes statement do.nload$ initiates ban2 transfers$ and ma2es direct debits possible.

$eports= GnuCash comes .ith o,er 30 prebuilt reports$ including :ccount -ummary$ /ncome$ 60penses$ Transaction ;eport$ 1alance -heet$ #rofitM!oss$ #ortfolio +aluation$ and many others. ;eports support graphical ,ie.s of the data$ including pie charts$ bar charts$ and scatter plots. The reports can be e0ported to <T5! files$ and are easily customiJed.

%cheduled &ransactions= GnuCash can automatically create and enter$ or remind you of scheduled or recurring transactions. 8hen you are reminded of scheduled transactions$ you can enter or postpone them. ;ecurring transactions can be configured to stop after a certain period. Mortgage and 'oan $epayment Druid= 'sed to set up a ,ariable payment loan scheduled transaction. Easy (ccount $econciliation= /ntegrated reconciliation ma2es reconciling your GnuCash accounts .ith statements simple and effecti,e. Multi)plat#orm "ompati*ility= GnuCash is supported on a ,ariety of platforms and operating systems. The list of fully supported operating systems )and platforms* for GnuCash ,".D.0 is= G&'%!inu0 )0D7$ -parc$ ##C*$ (ree1-D )0D7*$ 4pen1-D )0D7*$ -olaris )-parc*$ and 5ac4- @ )##C*. #re,ious ,ersions of GnuCash ha,e been 2no.n to .or2 .ith$ -G/ /;/@ )5/#-*$ /15 :/@ 4.".E );-%7000*$ 'ni0.are H )/ntel*$ and -C4 4pen-er,er E.0.4 )/ntel*$ but their current status is un2no.n.

Tracks &our #nvestments

GnuCash has a number of in,estment features. (rom simple certificates of deposit$ to publicly traded stoc2s$ GnuCash .ill trac2 all your in,estments.

%tock+Mutual Fund ,ort#olios= Trac2 stoc2s indi,idually )one per account* or in a portfolio of accounts )a group of accounts that can be displayed together*. On)line %tock and Mutual Fund Quotes= 8ith GnuCash$ you no longer need loo2 up your stoc2 ,alues one at a time. The process can be automated$ to al.ays present you .ith the lastest ,alue of your stoc2s.

#nternational 'upport
GnuCash is truly an application that .or2s .ith and understands users from all around the .orld. There are many built-in features to facilitate interaction .ith the international .orld .e li,e in today.

-ati.e 'anguages= GnuCash has been fully translated into "2 languages= Chinese$ CJech$ Dutch$ 6nglish$ (rench$ German$ /talian$ #ortuguese$ ;ussian$ -lo,a2$ -panish and -.edish. 5ore than "3 other languages are partially supported. Multiple "urrencies and "urrency &rading= 5ultiple currencies are supported and can be bought and sold )traded*. Currency mo,ements bet.een accounts are fully balanced .hen double-entry is enabled. -e/ Multi)"urrency &ransaction andling= GnuCash no longer reGuires separate currency e0change accounts to handle multiple currency transfers. International Date andling= GnuCash understands that different countries display the date differently. 3ou are able to .or2 .ith the date format you are accustomed to.

(usiness 'upport
GnuCash has many features to support the needs of the business accounting community.

(ccounts $ecei.a*le+,aya*le= GnuCash has an integrated :ccounts ;ecei,able and :ccounts #ayable system. 3ou can trac2 Customers$ +endors$ /n,oicing and 1ill #ayment$ and use different Ta0 and 1illing Terms in a small business. ,ayroll= GnuCash can trac2 company payroll. Depreciation= GnuCash can trac2 depreciation of capital assets. $eports= GnuCash offers a .ide ,ariety of ready-to-use business reports.

)ccounting Features
(or those 2no.ledgeable in accounting$ here is a list of GnuCashFs accounting features.

Dou*le Entry= 8hen enabled$ e,ery transaction must debit one account and credit others by an eGual amount. This ensures the >boo2s balance> - that the difference bet.een income and e0pense e0actly eGuals the sum of all ban2$ cash$ stoc2 and other assets. %plit &ransactions= : single transaction can be split into se,eral pieces to record ta0es$ fees$ and other compound entries. "hart o# (ccounts= : master account can ha,e a hierarchy of detail accounts underneath it. This allo.s similar account types such as Cash$ 1an2$ or -toc2 to be grouped into a master account such as N:ssetsO. 0eneral 'edger= 4ne register .indo. can display multiple accounts at the same time. This eases the trouble of trac2ing do.n typing%entry errors. /t also pro,ides a con,enient .ay of ,ie.ing a portfolio of many stoc2s$ by sho.ing all transactions in that portfolio. Income+Expense (ccount &ypes ("ategories)= These categoriJe your cash flo. and$ .hen used properly .ith the double-entry feature$ .ill pro,ide an accurate #rofitM!oss statement.

*hat+s ,e" in v1

%cheduled &ransactions GnuCash no. has the ability to automatically create and enter transactions$ remind you .hen these transactions are due$ gi,ing you the choice of entering$ postponing or remo,ing the automated transaction.

Mortgage and 'oan $epayment Druid 'sed to setup a ,ariable payment loan scheduled transaction. %mall !usiness (ccounting Features GnuCash can no. trac2 Customers and +endors$ /n,oicing and 1ill #ayment$ and can use different Ta0 and 1illing Terms in a small business.

Open Financial Exchange (OFX)= GnuCash is the first free soft.are application to support the 4pen (inancial 60change protocol. 5any financial institutions are beginning to support this format. ome !anking "omputer Inter#ace ( !"I)= GnuCash is the first free soft.are application to support the German <ome 1an2ing Computer /nterface protocol. The protocol includes statement do.nload$ initiates ban2 transfers$ and ma2es direct debits possible.

)bout this (ook

This manualFs goal is to sa,e you time. /t .ill get you started using GnuCash as Guic2ly as possible. 6ach chapter follo.s a simple format. : chapter begins .ith a NConceptsO discussion .hich introduces general themes and terminology$ addressed and used .ithin that chapter. N<o.-ToO sections$ .hich address specific procedures follo.. (inally$ a N#utting /t :ll TogetherO section ends the chapter by gi,ing detailed$ concrete e0amples. 1eginning users .ill find the NConceptsO sections ,ery helpful. They pro,ide a reference for good .ays to trac2 your finances$ and ser,e as an general introduction to financial bac2ground and terminology. 60perienced users can flip to the N<o.-ToO sections to Guic2ly scan procedures. These sections pro,ide to-the-point steps for accomplishing specific tas2s. The N#utting /t :ll TogetherO sections present real.orld e0amples in the form of a tutorial. 1eginning .ith creation of a file in Chapter 2$ each successi,e chapter builds on the pre,ious chapterFs tutorial.

This manual is organiJed into 3 main parts=

0etting %tarted Managing 1our ,ersonal Finances Managing 1our !usiness Finances

0etting %tarted pro,ides you .ith the most basic information needed to begin using GnuCash. 'se this part as a Guic2-start guide. /ts chapters .ill get you up and running=

Chapter "= 4,er,ie. Chapter 2= The 1asics Chapter 3= :ccounts Chapter 4= Transactions

Managing 1our ,ersonal Finances addresses common applications and features of GnuCash in greater detail. 3ou .ill see more specific cases$ based on freGuently as2ed Guestions about applying GnuCash to e,eryday situations. <ere are the applications and features co,ered in this part=

Chapter E= Chec2boo2 Chapter 7= Credit Cards Chapter H= !oans Chapter D= /n,estments Chapter I= Capital Gains Chapter "0= 5ultiple Currencies Chapter ""= Depreciation Chapter "2= :ccounts ;ecei,able Chapter "3= :ccounts #ayable Chapter "4= #ayroll :ppendi0 := 5igration Guide - Guide for former Auic2enP$ 5- 5oney or other A/( users :ppendi0 1= (reGuently :s2ed Auestions :ppendi0 C= Contributed :ccount Trees :ppendi0 D= G&' (ree Documentation !icense

Managing 1our !usiness Finances discusses the use of GnuCash in business accounting=

This manual also has an appendi0$ .hich contains e0tra information you might .ant to 2no.=

!ast$ but not least$ a glossary and inde0 help you Guic2ly locate topics.

Top Ten Reasons to %se GnuCash

8eF,e already discussed some of the general ad,antages of using GnuCash. <ere are some specific features offered by GnuCash that may not e0ist in other programs. ". -imple user interface GnuCash is as easy to use as a chec2boo2 register. /tFs simpler than a paper register$ because autocompletion and other entry shortcuts$ not only do .or2 for you$ but reduce data entry errors. 2. 6asy import GnuCash allo.s you to import data from on-line ban2 statements and soft.are pac2ages using A/( )Auic2enP /nterchange (ormat*$ 4(@ and <1C/ files. :n easy-to-use NdruidO .al2s you through re,ie.ing resulting changes and actually importing them into GnuCash. 3. -tatement reconciliation ;econcile monthly statements Guic2ly by entering the statement ending balance and chec2ing off transactions. GnuCash helps you catch any discrepancies bet.een your data and statements you recei,e.

4. /n,estment trac2ing GnuCash offers a host of .ays to trac2 your in,estment portfolio. -pecial in,estment accounts simplify data entry$ and on-line tools allo. you to update prices of your holdings as the mar2ets change. ;eports complete the picture$ allo.ing you to analyJe your in,estment decisions. E. 5ultiple currency support GnuCash allo.s you to trac2 multiple currencies. /f you ha,e ban2 accounts$ in,estments or other financial data in different currencies$ use GnuCash to monitor them. 7. CustomiJed reports and graphs ;eports and graphs gi,e you ,aluable information for filing ta0es$ budgeting$ or simply figuring out .here your money goes. GnuCash offers a ,ariety of easy-to-use reports and graphs to help analyJe your financial position. /t gi,es you the freedom to customiJe your o.n reports to suit your uniGue needs. H. Double entry To pro,ide complete records$ GnuCash uses the double entry method of boo22eeping. Double entry simply means that money doesnFt 9ust appear or disappear - an eGual amount must come from one location and go to another location. 1y trac2ing the transaction in both locations$ GnuCash .ill gi,e you detailed reports from the perspecti,e of either account. D. -ources of help : Tip of the Day dialog gi,es helpful tips to ne. users about GnuCash features. 8ithin the program$ a searchable <elp menu guides you to information or connects to the GnuCash .eb page for further assistance. GnuCash also has strong$ helpful de,eloper and user communities .ho pro,ide help through mailing lists. I. -hortcuts GnuCash offers many shortcuts to help you enter data. Type the first fe. characters of a common entry and GnuCash .ill automatically fill in the restL 3ou can also use copy$ paste and duplicate functions to sa,e typing time. ?eyboard shortcuts let you Guic2ly choose a menu option or to enter numerical data. 5any numeric entry fields can act as a calculator= enter >I2."DQ33.27> and .atch GnuCash input the corresponding sum for youL "0. 4pen source GnuCash doesnFt hide its methods. /f you .onder ho. GnuCash computed a number$ you can easily find it out. /n addition$ you can set preferences that tell GnuCash ho. much information to display to you. There is no Nsecret codeO used in GnuCash - it continues to be an open-source program. These are only a fe. of the ad,antages youFll disco,er .hen you start using GnuCash to trac2 your financial information. &o. get ready to en9oy the benefits of GnuCash for yourselfL

#nstallation
/nstallation of GnuCash can be simple$ as most modern linu0 distributions come .ith GnuCash precompiled and ready to go. /n fact$ most li2ely$ GnuCash is already installed. /f you do not ha,e GnuCash installed$ the simplest method for installing it is to insert the installation CD that came .ith your distribution and follo. the instructions. The 0nu"ash home page contains detailed instructions on ho. to install GnuCash in the e,ent your current distribution does not include it or you .ant to install a different ,ersion. 3ou can also read the ;6:D56 file in the source code.

Chapter . The (asics

Table of Contents :ccounting Concepts The E 1asic :ccounts The :ccounting 6Guation Double 6ntry Data 6ntry Concepts (iles$ :ccounts and Transactions Double 6ntry The GnuCash /nterface Create a ne. set of accounts Tip of the Day :ccount Tree 8indo. :ccount ;egister 8indo. Tool 1ar 1uttons 5enu /tems 5enu -hortcuts -etting #references :ccounts 1usiness General /nternational 4n-line 1an2ing ;econcile ;egister ;egister Colors -cheduled Transactions Getting <elp <elp 5anual 8eb :ccess Topic -earch Creating and -a,ing (iles /mporting A/( (iles 1ac2ing 'p and ;eco,ering Data 1ac2up file ).0ac* !og file ).log* !oc2 files ).!&? and .!C?* (ile 5anagement #utting /t :ll Together This chapter .ill introduce some of the basics of using GnuCash. /t is recommended that you read through this chapter$ before starting to do any real .or2 .ith GnuCash. The chapters .hich follo. this .ill begin to sho. you hands on e0amples.

)ccounting Concepts
GnuCash is easy enough to use that you do not ha,e to ha,e a complete understanding of accounting principals to find it useful. <o.e,er$ you .ill find that some basic accounting 2no.ledge .ill pro,e to be in,aluable as GnuCash .as designed using these principals as a template. /t is highly recommended that you understand this section of the guide before proceeding.

The / (asic )ccounts

1asic accounting rules group all finance related things into E fundamental types of NaccountsO. That is$ e,erything that accounting deals .ith can be placed into one of these E accounts=

(ssets - things you o.n. 'ia*ilities - things you o.e. E2uity - o,erall net .orth. Income - increases the ,alue of your accounts. Expenses - decreases the ,alue of your accounts.

/t is clear that it is possible to categoriJe your financial .orld into these E groups. (or e0ample$ the cash in your ban2 account is an asset$ your mortgage is a liability$ your paychec2 is income$ and the cost of dinner last night is an e0pense.

The )ccounting $0uation

8ith the E basic accounts defined$ .hat is the relationship bet.een themK <o. does one type of account affect the othersK (irstly$ eGuity is defined by assets and liability. That is$ your net .orth is calculated by subtracting your liabilities from your assets= (ssets ) 'ia*ilities 3 E2uity (urthermore$ you can increase your eGuity through income$ and decrease eGuity through e0penses. This ma2es sense of course$ .hen you recei,e a paychec2 you become >richer> and .hen you pay for dinner you become >poorer>. This is e0pressed mathematically in .hat is 2no.n as the :ccounting 6Guation= (ssets ) 'ia*ilities 3 E2uity 4 (Income ) Expenses) This eGuation must al.ays be balanced$ a condition that can only be satisfied if you enter ,alues to multiple accounts. (or e0ample= if you recei,e money in the form of income you must see an eGual increase in your assets. :s another e0ample$ you could ha,e an increase in assets if you ha,e a parallel increase in liabilities.

: graphical ,ie. of the relationship bet.een the E basic accounts. &et .orth )eGuity* increases through income and decreases through e0penses. The arro.s represent the mo,ement of ,alue.

1ouble $ntry
The accounting eGuation is the ,ery heart of a double entry accounting system. (or e,ery change in ,alue of one account in the :ccounting 6Guation$ there must be a balancing change in another. This concept is 2no.n as the ,rinciple o# !alance$ and is of fundamental importance for understanding GnuCash and other double entry accounting systems. 8hen you .or2 .ith GnuCash$ you .ill al.ays be concerned .ith at least 2 accounts$ to 2eep the :ccounting 6Guation balanced. Double entry accounting ser,es t.o purposes. The first is to create an accounting trail$ money al.ays has to come from some.here and go to some.here. :dditionally$ double entry accounting historically ser,ed to double chec2 the math of an accountant. 1ecause the numbers are entered into multiple accounts simultaneously$ there are multiple places to chec2 to ma2e sure the totals match. 4f course$ .ith the

ad,ent of computers$ the chances of a mathematical problem are lo.$ but it is good to 2no. that the concept still e0istsL Double entry accounting has been around since the late "Eth century$ .hen it .as described by an /talian friar$ !uca #acioli. Traditional double entry accounting in,ol,es recording each transaction in a boo2 called a ledger$ then copying each part of the transaction to separate boo2s called 9ournals. This method is still used in businesses today as a .ay to a,oid entry errors and to trac2 the source of those errors. GnuCash simplifies this traditional accounting by copying part of each transaction for you$ so it may not catch some of the entry errors that .ould sho. up in traditional accounting. 1ut it .ill flag transactions that are not balanced$ and it .ill let you 2no. .hen an account name is missing.

,ote
Calling this double-entry boo22eeping is a bit misleadingC it .ould be some.hat more accurate to call it multiple- entry boo22eeping$ since a transaction can affect more than t.o accounts. 'nfortunately$ thereFs H00 years of history of use of the term$ .hich sufficiently discourages changing it.

1ata $ntry Concepts

8hen entering data in GnuCash$ you should be a.are of the 3 le,els of organiJation in .hich GnuCash di,ides your data= files$ accounts and transactions. These le,els are presented in their order of comple0ity$ one file contains many accounts and one account contains many transactions. This di,ision is fundamental to understanding ho. to use GnuCash.

Files2 )ccounts and Transactions

GnuCash uses #iles for storing information. GnuCash pro,ides three types of files= data files$ bac2up files$ and log files. The main file that you .ill use to store your data is a data file. 3ou .ill probably ha,e only one data file that you use for your home data$ but GnuCash .ill automatically sa,e a bac2up copy for you each time you sa,e that data file. GnuCash also pro,ides log files .hich can be used to help reconstruct data. 1ac2up and log files are described later in this chapter. :n account is a place for 2eeping trac2 of .hat you o.n$ o.e$ spend or recei,e. :lthough you only ha,e one main data file$ that file .ill contain many accounts. 3ou probably already thin2 of money you o.n or o.e as being in an account. (or e0ample$ at some point you opened chec2ing and sa,ings accounts at a particular ban2$ and that ban2 sends you monthly statements sho.ing ho. much money you o/n in these accounts. Credit card accounts also send you statements sho.ing .hat you o/e to a credit card company$ and the mortgage company may send you periodic statements sho.ing ho. much you still o/e on your loan. /n GnuCash$ accounts are also used to categoriJe money you recei,e or spend$ e,en though these are not physical accounts that recei,e statements. :s .e .ill co,er more in Chapter 3$ income type accounts are used to categoriJe money recei,ed )li2e a paychec2*$ and e0pense type accounts are used to categoriJe money spent )for piJJa$ to pay a bill$ etc.* These accounts function much li2e categories in some other financial programs$ .ith a fe. ad,antages discussed in Chapter 3. : transaction represents the mo,ement of money from one account to another account. 8hene,er you spend or recei,e money$ or transfer money bet.een accounts$ that is a transaction. /n GnuCash$ as .e .ill see in the ne0t section$ transactions al.ays in,ol,e at least t.o accounts. 60amples of transactions are= paying a bill$ transferring money from sa,ings to chec2ing$ buying a piJJa$ .ithdra.ing money$ and depositing a paychec2. Chapter 4 goes more in depth on ho. to enter transactions in GnuCash.

1ouble $ntry
3ouF,e probably heard the saying$ N5oney doesnFt gro. on treesO. /t means that money must come from

some.here - it doesnFt 9ust NappearO. Dou*le entry accounting is a method of record-2eeping that lets you trac2 9ust .here your money comes from and .here it goes. 'sing double entry means that money is ne,er gained nor lost - an eGual amount is al.ays transferred from one place to another. 8hen you .ithdra. cash$ you are transferring money from your ban2 account to your .allet. 8hen you .rite a chec2 to the grocery store$ you are transferring money from your chec2ing account to the grocery store. :nd .hen you deposit a paychec2$ you are transferring money from your source of income to your ban2 account. /n GnuCash$ these transfers are 2no.n as transactions$ and each transaction reGuires at least t.o accounts. To enter the cash .ithdra.al$ for e0ample$ you .ould enter a transfer of money from a ban2 account to a cash account. 3ou .ould record the grocery chec2 as a transfer from a chec2ing account to a groceries e0pense account. :nd the paychec2 deposit is recorded as a transfer from an income account to a ban2 account. 'nli2e traditional accounting pac2ages$ GnuCash ma2es it ,ery easy to enter your double entry transactions. Chapter 4 gi,es more detail on entering transactions$ but for no. letFs ta2e a general loo2 at ho. they .or2. (or a basic transaction li2e .riting a chec2$ you first create t.o accounts= a chec2ing account and an account for the e0pense. (or e0ample$ if you .rite a chec2 to pay for groceries$ then you need both a chec2ing account and a groceries account. )-ee Chapter 3 for more detail on creating accounts.* To record the chec2$ you simply enter a transaction to transfer money from the chec2ing account to the groceries account. /n this e0ample$ the GnuCash transactions loo2 li2e this .hen ,ie.ed from the register .indo.s of the chec2ing account=

This image sho.s entering the date$ description and transfer account for a payment of RE0 to the Grocery -tore. /n this transaction$ a chec2 is .ritten to Grocery -tore for RE0. -ince this is a double entry transaction$ at least t.o accounts are affected and must be part of the transaction. GnuCash automatically enters the current account name ):ssets=Chec2ing* for you so you only enter the other account name affected )60penses=Groceries*.

,ote
/n this e0ample for double entry accounting .e used a chec2ing account to pay for the groceries. 1ut$ notice that concept is the same no matter .hat method you use to pay for the groceries. /f instead you used a credit card$ the double entry accounting .ould simply in,ol,e your Credit Card account instead of the Chec2ing account. 8hat about your paychec2K 3ou can see that money goes into a ban2 account$ but .here does it come fromK /n double-entry$ the money has to come from some.here. Technically$ that money comes from your employer$ but you donFt care about trac2ing your employerFs accounts. -o ho. do you account for money coming inK /n GnuCash$ you create a special income type account to trac2 your incoming paychec2s. )-ee Chapter 3 for more information on creating income accounts.* To record the paychec2s$ you simply enter a transaction to transfer money from the income account to a ban2 account. <ereFs .hat a paychec2 deposit loo2s li2e in GnuCash.

This image sho.s entering the date$ description and transfer account for a R700 -alary payment from 6mployers ; 's. /n this e0ample$ R700 is transferred from a -alary income account to the Chec2ing :ccount. 1ecause of the special nature of income accounts$ discussed in Chapter 3$ this transaction increases both the chec2ing account balance and the income account balance by the amount transferred. The main principle to remember is that there are at least t.o parts to e,ery transaction$ and the total amount transferred from a set of accounts must eGual the total amount transferred to another set of accounts. 8hen a transaction transfers an eGual sum from accounts to other accounts$ that transaction is said to be in *alance. /n GnuCash$ as in double-entry accounting$ you .ant to ha,e all of your transactions in balance. 8hy is this important to youK /f all of your transactions are in balance$ then your money is all accounted for. GnuCash has a record of .here that money came from and .here it .as used. 1y storing the names of all accounts in,ol,ed in each transaction$ you pro,ide data that can be sorted and ,ie.ed in report form later. ;eports allo. you to see things li2e ho. much money you made for the year and .here it all .ent$ .hat your net .orth is$ and .hat your ta0es might be for the year. The more information you pro,ide .hen entering transactions$ the more detailed your reports .ill be. )ccounting Terminology :ccountants use the terms de*it and credit to describe .hether money is being transferred to or #rom an account. 5oney is recorded in the debit column$ .hich is al.ays the left column$ .hen it is being transferred to an account. 5oney is recorded in the credit column$ .hich is al.ays the right column$ .hen it is being transferred #rom an account. 5oney al.ays flo.s from the right column of one account to the left column of another account. The main rule of accounting is this= For e.ery transaction5 total de*its must e2ual total credits6 This is 9ust another .ay of repeating the double entry rule$ that for each transaction$ the amount of money transferred #rom accounts must eGual the amount transferred to other accounts 3ou donFt ha,e to use the terms debit and credit to use GnuCash$ ho.e,er. GnuCash account registers default to common column headings such as deposit and .ithdra.al - if you are more comfortable .ith those headings$ use them. /f you prefer the credit and debit headings$ you can change the column headings to use accounting labels from the menu item 6dit -S #references General )see section 2.E for more detail on setting preferences*.

The GnuCash #nterface

The ,ery first time you open GnuCash$ you .ill see the 8elcome to GnuCashL dialog. (rom there$ GnuCash pro,ides other tools to help you easily find .hat you are loo2ing for. !etFs ta2e a loo2 at some of the common screens and dialog bo0es you .ill see.

Create a ne" set of accounts

The &e. :ccount <ierarchy -etup druid allo.s you to create se,eral accounts at once. 8hen you open GnuCash the first time$ you .ill get this dialog=

This image sho.s the first screen of the &e. :ccount <ierarchy -etup Druid. Clic2 &e0t and follo. the instructions pro,ided in the dialog. The dialog pro,ides a default set of accounts .ith predefined account types$ and you simply select the accounts you .ant. (or more information on account types$ see section 3.2. /f you intend to import your data from another program and you .ant to 2eep the same account names you used in that program$ you may .ant to delay setting up default accounts at this time. 3ou can simply import the data and the account names into GnuCash from the other program )-ection 2.H e0plains ho. to do this*.

Tip of the 1ay

GnuCash pro,ides a Tip of the Day dialog to gi,e helpful hints for using the program=

This image sho.s the Tip of the Day.

These tips pro,ide useful information for beginning users. To ,ie. more of the tips$ clic2 &e0t to continue. /f you do not .ish to see this dialog bo0 on startup$ deselect the bo0 ne0t to Display this dialog ne0t time. 8hen you ha,e finished ,ie.ing the helpful tips$ clic2 Close to close the Tip dialog.

)ccount Tree *indo"

3ou should no. see the :ccounts .indo.$ .hich appears as sho.n belo.. The e0act layout of the account tree .ill depend on .hich default accounts you selected during the &e. :ccount <ierarchy -etup. /n this e0ample$ the >-imple Chec2boo2> accounts are sho.n.

This image sho.s the :ccounts .indo.. The :ccount Tree .indo. pro,ides an o,er,ie. of the data contained in the current file. /t contains a list of account names and their current balances. (rom this .indo.$ you can open any of the accounts. The indi,idual account .indo.s are called account registers. GnuCash allo.s you to ha,e as many account registers open as you .ish. :t the top of this .indo. is the title bar$ .hich displays the file name )once you ha,e sa,ed the file.* 1elo. that is the menu bar. 3ou can access the menu options by either clic2ing on these menu headings or by using shortcut 2ey combinations$ co,ered later in this chapter. &e0t is the tool bar$ .hich contains buttons for the most common functions. 1elo. that is the status bar$ .hich tells you information about .hat you o.n )&et :ssets* and ho. much money you ha,e made )#rofits*. The account tree appears belo. the status bar. 4nce you ha,e started creating accounts$ the account names .ill appear in the account tree. 3ou can customiJe .hich headings sho. up by using the 4ptions button.

)ccount Register *indo"

The :ccount ;egister .indo.s are used to enter and edit your account data. :s the name suggests$ they loo2 similar to a chec2boo2 register. 8hen you double-clic2 an account name in the :ccounts .indo.$ the ;egister .indo. for that account .ill open.

This image sho.s The Chec2ing :ccount - ;egister .ith se,eral transactions. Chapter 4 e0plains more about account register .indo.s and ho. to enter data into them. (or no.$ note that the parts of an account register .indo. are similar to the parts of the account tree .indo. described earlier. The title bar at the top contains the account name. 1elo. that$ the menu bar contains menu options related to the account register. Tool bar buttons simplify common data entry functions. The status bar appears belo. the tool bar$ and it displays four types of account balances co,ered in Chapter 4. :t the bottom of the account register .indo.$ information appears about the current location of the cursor.

Tool (ar (uttons

1oth the account tree .indo. and the account register .indo. contain tool bar buttons. These buttons pro,ide Guic2 access to common functions such as -a,e and 4pen in the account tree .indo. and ;ecord and Delete in the account register .indo.. /f you are not sure .hat a button does$ mo,e the mouse pointer o,er that button$ and you should see a description of the function appear. <ere is a summary of the account tree .indo. buttons=

-a,e - 'se this function often to sa,e the current file to dis2. Close - 'se this function to close the current noteboo2 page. 4pen$ 6dit$ &e. and Delete - These are functions related to accounts. They are discussed in Chapter 3. 4ptions - This button edits the account ,ie. options. 60it - Closes your GnuCash session.

;egister buttons are discussed in Chapter 4.

3enu #tems
The account tree .indo. and the account register .indo. both contain menu headings in a menu bar. Clic2ing on a menu heading brings up the menu items for that heading. 3ou can clic2 on the account tree menu headings and then mo,e the mouse pointer o,er the menu items to see .hat they do. :s the pointer mo,es o,er a menu item$ a description of the item appears in the lo.er left-hand corner of the .indo.. To select a menu item$ clic2 on it. 3ou can also access the most common menu items in a .indo. by right-clic2ing the mouse any.here in that .indo.. /n the account tree .indo.$ this .ill bring up a list of account items. /n the account register .indo.$ this .ill bring up a list of transaction items.

4ther .ays of accessing menu items are through 2eyboard shortcuts$ described ne0t.

3enu 'hortcuts
5ost of the menu items ha,e 2eyboard shortcuts$ and these are mar2ed by underlined characters in the menu names. #ressing the )lt 2ey .ith the underlined character in the menu heading .ill bring up the menu items for that heading. 4nce the menu items are displayed$ type the underlined character in the menu item to acti,ate it. (or e0ample$ typing )lt-F in the main .indo. brings up the (ile menu$ then typing ' .ill sa,e the file. : fe. of the menu items use Ctrl 2ey and function )for e0ample F4 to open a ne. file* 2ey shortcuts as .ell$ and these are listed ne0t to the items. GnuCash$ as a Gnome application$ also allo.s you to define your o.n menu shortcuts. To define a shortcut$ clic2 on the menu header and mo,e the mouse pointer o,er the menu item. 8hile the menu item is highlighted$ press a 2ey or 2ey combination to set the shortcut. 3ou should no. see your shortcut choice ne0t to the item in the menu. To delete a shortcut$ press the 1elete 2ey .hile the menu item is highlighted.

'etting 5references
GnuCash allo.s you to customiJe your session by setting se,eral preference options. (rom the menu select 6dit -S #references$ then ma2e your desired changes using the list of items sho.n on the left. 4nce you ha,e finished ma2ing your preference changes$ select :pply or 4? to apply the changes to your session. )-electing :pply applies the changes .hile lea,ing the #references .indo. still open. -electing 4? applies the changes and closes the #references .indo..* :t any time$ you can clic2 on the Default button to return the options to the default preference setting.

)ccounts
The :ccounts item lets you set the follo.ing options=

:ccount -eparator - The account separator is the character that separates a parent account from its sub-account$ for e0ample 'tilities=6lectric. The default is a =)Colon*$ but you can also select %)-lash*$ T)1ac2slash*$ -)Dash* or .)#eriod*. #arent accounts and sub-accounts are discussed in section 3.4 ;e,ersed-balance accounts types - This option lets you determine .hether account balances .ill display as positi,e or negati,e numbers=

&one sho.s all credit balances as negati,e and all debit balances as positi,e. )-ee :ccounting Terminology note in this chapter for more information on debits and credits.* Credit :ccounts )default* displays a positi,e balance for account types that .ould normally carry a credit balance )income$ credit$ liability$ eGuity*. -ee Chapter 3 for more information on these account types. /ncome M 60pense assigns a positi,e credit balance to income account balances and a negati,e debit balance to e0pense account balances. -ee Chapter 3 for more information on these account types.

'se accounting labels - -elect this option if you .ant column headings to refer to debits and credits instead of the default informal headings. )-ee :ccounting Terminology note in this chapter for more information on debits and credits.*

(usiness
The 1usiness item lets you set the follo.ing options=

&umber of ;o.s - !ets you select the default number of register ro.s to display in in,oices$ bills

and e0pense ,ouchers.

/n,oice )or 1ill* Ta0 /ncludedK - Determines .hether ta0es specified in the Ta0 Table are already included in the ,alue of the item. -et this if youFre in a locale )li2e :ustralia* .here the ta0es )e.g. G-T* is included in the price of your goods. /n the '-$ .here the ta0 is added to the ,alue$ you do not .ant to set Ta0 /ncluded. &otify 1ills DueK - !ets you set .hether you .ant to be notified of .hen a bill is soon to be due. /f selected$ you can specify the number of days in ad,ance to notify .ith the 1ills Due Days= option.

General
/n General$ you .ill see the default settings sho.n here=

This image sho.s the GnuCash #references dialog .here the options of ho. GnuCash loo2s and acts are setup.

-ho. :d,anced -ettings - 8hen this is selected$ GnuCash displays the :d,anced item in the GnuCash #references dialog. 3ou must clic2 on >:pply> before the ad,anced page .ill be displayed. Tool 1ar 1uttons - -elect .hether to display icons$ te0t$ or both on the tool bar. Display >Tip of the Day> - 3ou can turn on or off the option to display the NTip of the DayO dialog on startup. Display negati,e amounts in red - /f you turn off this option$ GnuCash .ill display negati,e numbers in blac2. :utomatic Decimal #oint - This option .ill automatically insert a decimal point into numbers you type in. :uto Decimal #laces - /f you select the :utomatic Decimal #oint option$ this option allo.s you to set the number of decimal places to be used. &o account list setup on ne. file - This option turns off the display of the &e. :ccount <ierarchy -etup druid .hen (ile -S &e. (ile is selected. Days to retain log files - This option deletes log files )and bac2up files* after the number of days set here. 'se file compression - This option determines .hether the GnuCash data file .ill be compressed

or not.

#nternational
The /nternational preferences item allo.s you to control the country specific beha,ior of GnuCash.

Date (ormat - This item controls the appearance of the date. The a,ailable options are '-$ '?$ 6urope$ /-4$ and !ocale. Choosing >!ocale> .ill automatically determine the date format based on your operating system settings. &e. :ccount Default Currency - This item determines .hich currency .ill be selected by default .hen creating ne. accounts. Default ;eport Currency - This item determines .hich currency .ill be used by default .hen creating reports. 'se 24-hour time format - This item toggles the use of 24 hour time format. 6nable 6uro support - /f selected$ enables support for the 6uropean 'nion 6';4 currency.

!n6line (anking
The 4n-line 1an2ing M /mporting item contains only one option$ A/( +erbose Documentation. The first time you use the importer )discussed later in this chapter*$ you may notice that the importer has detailed instructions on ho. to import a file. 4nce you ha,e become familiar .ith using the importer$ you might .ant to turn off this option. Turning off the option gi,es you less detail in the importer dialogs.

Reconcile
The ;econcile preferences item affects the beha,ior of GnuCash .hen reconciling accounts. 5ore information about reconciling accounts can be found in >Chapter 4= 6ntering Transactions> of this guide.

:utomatic interest transfer - /f selected$ prior to reconciling an account .hich charges or pays interest$ prompt the user to enter a transaction for the interest charge or payment. Currently only enabled for 1an2$ Credit$ 5utual$ :sset$ ;ecei,able$ #ayable$ and !iability accounts. :utomatic credit card payments - /f selected$ after reconciling a credit card statement$ prompt the user to enter a credit card payment. Chec2 off cleared transactions - /f selected$ automatically chec2 off cleared transactions .hen reconciling.

Register
The ;egister preferences item affects the beha,ior of the transaction register .indo.s. 5ore information about the transaction register can be found in >Chapter 4= 6ntering Transactions> of this guide.

Default ;egister -tyle - you can choose from 3 different styles for register .indo.s$ 1asic !edger )default*$ :uto--plit !edger$ and Transaction ournal. The basic style is a standard one-line register .here e,erything appears on a single line. The auto-split style is similar to the basic style e0cept that the current transaction is split-e0panded. The 9ournal style has e,ery transaction splite0panded. Double !ine 5ode - /f selected$ sho. t.o lines of information for each transaction instead of one. F6nterF mo,es to blan2 transaction - /f selected$ mo,e to the blan2 transaction after the user presses FenterF$ other.ise mo,e do.n on ro.. Confirm before changing reconciled - /f selected$ use a dialog to confirm a change to a reconciled transaction.

;egister font= - The font to use in the transaction register .indo.. ;egister hint font= - The font to use to sho. hints in the transaction register .indo..

Register Colors
The ;egister Colors preferences item changes the appearance of the register .indo.. To change the color of one of the items listed$ simply clic2 on the color bo0 and choose the ne. color. 5ore information about the transaction register can be found in >Chapter 4= 6ntering Transactions> of this guide. /f selected$ the item Double mode colors alternate .ith transactions configures the register .indo. to alternate bet.een the primary and secondary colors .ith each transaction$ instead of each ro..

'cheduled Transactions
The -cheduled Transactions preferences item affects the beha,ior of GnuCash for scheduling transactions. 5ore information about scheduled transactions can be found in >Chapter 4= 6ntering Transactions> of this guide.

;un on GnuCash start - /f selected$ the >-ince-!ast-;un> .indo. .ill appear on GnuCash startup. :uto-Create ne. -cheduled Transactions by default - /f selected$ ne. -cheduled Transactions .ill ha,e the F:uto CreateF flag set by default. &otify on ne.$ auto-created -cheduled Transactions - /f selected$ ne. -cheduled Transactions .ill ha,e the F:uto CreateF flag set to F&otifyF by default. Default number of days in ad,ance to create - The default number of days in ad,ance to create ne. -cheduled Transactions. Default number of days in ad,ance to remind - The default nubbier of days in ad,ance to remind on ne. -cheduled Transactions. Template ;egister !ines= - &umber of lines in the template register to display.

Getting Help
GnuCash offers help in many .ays. 8e ha,e already co,ered the Tip of the Day dialog that gi,es you helpful hints upon startup of your GnuCash session. GnuCash also offers an e0tensi,e help manual.

Help 3anual
4nce you ha,e opened GnuCash$ you .ill see the :ccount Tree .indo. <elp menu heading$ .hich opens the on-line manual. The on-line manual is organiJed by topic$ and you can e0pand each topic into its subtopics. Topics are listed on the left side. To select a topic or subtopic$ clic2 on it$ and you should see the te0t for that topic appear on the right. 'se the 1ac2 and (or.ard buttons to na,igate through your topic choices$ and print any te0t using the #rint button.

*eb )ccess
The GnuCash <elp .indo. also acts as a simple .eb bro.ser$ so you can pull up a .eb site for additional information. 3ou can open any .eb site under this .indo. by clic2ing the 4pen tool bar button and then typing in the ';!. 'se the 1ac2$ (or.ard$ ;eload$ -top$ and #rint buttons as you .ould in a standard bro.ser. The 0nu"ash .eb site contains helpful information about the program and about any updates to it. /t also contains lin2s to the GnuCash mailing lists for de,elopers and users$ and you can search the archi,es of

these mailing lists for discussions on a particular topic. /f you donFt find the ans.ers you are loo2ing for$ you can post your Guestion to the user list$ and someone on the list .ill attempt to ans.er you.

Topic 'earch
The online manual also pro,ides a search function. To search for a particular topic$ clic2 the -earch tab at the bottom of the help .indo. and type in your topic in the field pro,ided. Clic2 the -earch button to complete your search. : list of choices should appear in the bo0 belo.$ clic2ing a choice .ill bring up its te0t on the right.

Creating and 'aving Files

/f you are using GnuCash for the first time$ it .ill automatically open a ne. file .hen you begin. (ollo. these steps to sa,e the file under a ne. name= ". Choose (ile -S -a,e :s... from the menu bar or select the -a,e toolbar button. GnuCash .ill bring up this .indo.=

This image sho.s the -a,e dialog. 2. /n the te0t bo0 belo. -election type your chosen file name )e.g. gcashdata*. 3. Clic2 the 4? button to sa,e the file. /f you are 2eeping trac2 of finances for a single household$ you need only one file. 1ut if you are also trac2ing business finances or .ant to 2eep data separate for some reason$ then you .ill need more than one file. To create a ne. file= ". (rom the main menu$ choose (ile -S &e. (ile. 2. (ollo. the steps abo,e for sa,ing a file under a ne. name. 1efore ending each GnuCash session$ be sure to sa,e your data changes using (ile -S -a,e or the -a,e toolbar button. /n fact$ it is a good idea to sa,e your data changes often$ since GnuCash does not permanently record your changes until you sa,e them. To open an e0isting file$ select (ile -S 4pen and choose your file from the list.

#mporting 7#F Files

,ote
This section tells you ho. to initially import data from other financial programs that use A/( )Auic2enP /nterchange (ormat*. -ection "".E addresses importing A/( data from online ban2 statements. To import data from Auic2enP$ 5- 5oney$ or other programs that use A/()Auic2enP /nterchange (ormat*$ you must first e0port your data to a A/( file. 4ne .ay to do this is to e0port each account as a separate A/( file. :n easier .ay$ a,ailable in Auic2enP ID and beyond$ is to e0port all accounts at once into a single A/( file. Chec2 your programFs manual to determine if this option is a,ailable. 4nce your data is in A/( form$ follo. the easy 3-step import process described belo.. 1efore you get started$ though$ please note that part of the import process in,ol,es chec2ing for duplicate transactions$ so it is ,ery important that you load all of your A/( files before importing. Duplicate transactions result .hen more than one account is in,ol,ed. (or e0ample$ if one of your transactions transferred money from sa,ings to chec2ing$ you .ould end up .ith this same transaction recorded t.ice - once in the sa,ings account and once in the chec2ing account. To import A/( files= ". !oad all of the A/( files containing data you .ish to import. To do this$ select (ile -S /mport -S /mport A/(... from the menu. 8hen the A/( /mport dialog bo0 appears$ clic2 &e0t and follo. the instructions to guide you through the process of loading your files.

This image sho.s the start of the A/( /mport Druid. 3ou .ill be prompted for a filename to load. 'se the -elect button to select your A/( file and clic2 &e0t to load it. 4nce the file is loaded$ select !oad another file if you ha,e more files to load. 8hen you ha,e loaded all your A/( files$ clic2 &e0t to continue .ith the import process. 2. ;e,ie. the GnuCash accounts to be created. The importer then matches up your A/( accounts and categories .ith GnuCash accounts and gi,es you a brief description of the matching process. Clic2ing &e0t .ill bring you to a ,ie. comparing

your A/( accounts .ith the corresponding GnuCash accounts created. To change an account name$ select the ro. containing that account name and edit the name in the dialog bo0 pro,ided. Clic2 &e0t .hen you ha,e finished ma2ing changes$ and proceed through a similar category matching process. A/( income and e0pense categories import as GnuCash income and e0pense accounts )see section 3." for more on this*. 5a2e changes to these account names if necessary$ and clic2 &e0t to continue.

,ote
/f you are not sure .hat changes are needed$ it is safe to accept the GnuCash account names. /t is easy to edit the accounts later if you find you need to ma2e a change. (rom the drop-do.n list$ select a standard currency to be used for imported accounts and clic2 &e0t to continue. /f you ha,e stoc2s$ mutual funds$ or other securities$ you .ill be prompted for additional information. The importer dialog .ill as2 for the e0change or listing )i.e. &:-D:A*$ the securityFs full name$ and the tic2er symbol. /f you do not ha,e this information handy$ you can edit the account information later$ once the import is complete. Clic2 &e0t to continue. 3. Tell GnuCash to import the data. The last step is the import. 4nce you ha,e ,erified your account names and in,estment information$ clic2 (inish in the 'pdate your GnuCash accounts page to complete the import process. Depending upon the siJe of your file$ the import might ta2e a fe. minutes to complete$ so a progress bar displays the percentage finished. 8hen the import process is complete$ GnuCash .ill return you to the main .indo.$ .hich should no. display the names of the accounts you imported.

(acking %p and Recovering 1ata

GnuCash creates se,eral types of files to help ensure that your data is not lost. 3ou may see files .ith the follo.ing file e0tensions= 0ac$ log$ !C?$ !&? in the same directory as your principal data file. 8hat each of these files does is presented belo..

(ackup file 8 9ac:

6ach time you sa,e your data file$ a bac2up copy .ill also be sa,ed .ith the e0tension 0ac. This bac2up file is a complete copy of your pre,ious data file$ and the filename format refers to the data file$ year$ month$ day and time of the bac2up. (or e0ample$ the filename gcashdata.20010404185747.xac indicates this is a bac2up copy of the file gcashdata sa,ed in the year 200"$ :pril 4$ at 7=EH=4H p.m. To restore an old bac2up file$ simply open the .0ac file .ith the date to .hich you .ish to return. 1e sure and sa,e this file .ith a different file name$ do not use a .0ac e0tension for you regular file name.

Log file 8 log:

6ach time you open a file in GnuCash$ a .log is created and sa,ed .ith the same name format as the .0ac bac2up files. :s you ma2e changes to the open data file$ the log file sa,es only those changes. !og files are not a full bac2up of your data file - they simply record changes you ha,e made to the data file in the current GnuCash session. /n case you e0it GnuCash inad,ertently$ possibly due to a po.er outage or a system .ide crash$ it is possible to reco,er most of your .or2 since the last time you sa,ed your GnuCash file using this log file. This is the procedure=

4pen the last sa,ed GnuCash file. Go to >(ile> -S >/mport> -S >;eplay GnuCash .log file> and select the one .log file .ith the same date as the sa,ed file you 9ust opened. 5a2e sure that you pic2ed the right .log file$ or you .ill

possibly .rec2 ha,oc in your accounts. !og replaying .ill reco,er any transaction affecting the balance entered since the last sa,e$ including those created from scheduled transactions and business features )in,oices$ bills$ etc.*.

,ote
8arning= Changes to the scheduled transactions$ in,oices of bills themsel,es are &4T reco,ered$ and their transactions that .ere reco,ered may not be properly associated .ith them$ and should thus be double-chec2ed. 6specially for business transactions$ you may ha,e to delete and re-create some of them. /f you do not$ although the balance .ill be correct$ some reports may not.

Lock files 8 L,; and LC;:

3ou may occasionally see .!&? and .!C? files appear. These do not store any data$ but they are created to pre,ent more than one user from opening the same file at the same time. These files are automatically created .hen you open the file$ to loc2 it so no one else can access it. 8hen you close your GnuCash session or open another file$ GnuCash unloc2s the first data file by deleting the !C? and !&? files. /f GnuCash crashes .hile you ha,e a data file open$ the !C? and !&? files are not deleted. The ne0t time you try to open GnuCash$ you .ill get a .arning message that the file is loc2ed. The .arning message appears because the !&? and !C? files are still in your directory. /t is safe to choose 3es to open the file$ but you should delete the .!&? and .!C? files )using a terminal .indo. or your file manager.* 4nce those files are deleted$ you .ill not get the .arning message again unless GnuCash crashes.

File 3anagement
-o .hich files should you 2eep aroundK ?eep your main data file$ of course - data files do not ha,e an automatic file e0tension. /tFs a good idea to 2eep some of the more recent .0ac files$ but you can safely delete the .log files since they are not complete copies of your data. 3ou should also delete any .!C? and .!&? files that you see after closing GnuCash. /f you decide to manually bac2 up your data file to another dis2$ you only need to bac2 up the main data file - not the .0ac files.

,ote
GnuCash .ill automatically delete any .0ac$ .log files that are older than 30 days. 3ou can change this beha,ior in the GnuCash preferences.

5utting #t )ll Together

,ote
This section begins a tutorial that .ill continue throughout this boo2. :t the end of each chapter$ you .ill see a #utting /t :ll Together section that .al2s you through e0amples to illustrate concepts discussed in that section. 6ach #utting /t :ll Together section builds on the pre,ious one$ so be sure to sa,e your file for easy access. !etFs get startedL ". (irst$ letFs create a file to store your real data. 4pen GnuCash and go through the &e. :ccount <ierarchy -etup dialog. 3ou .ill create a file and accounts to be used for your home finances$ so choose the accounts that pertain to you. /f you are not sure .hat accounts you .ill need$ clic2 the -elect :ll option to create all of the accounts pro,ided. 8hen you ha,e completed the setup$ sa,e

this file .ith a filename you .ant to use for your home data. 2. &e0t$ create a file to store test data. This is the file that .ill be used in the tutorials throughout this manual. Clic2 (ile -S &e. to create a ne. file$ and name it gcashdata. 3our main .indo. should no. loo2 something li2e this=

This image sho.s the :ccount Tree .indo. .ith a set of accounts loaded from the druid. 3. &o.$ ad9ust some preferences in the account tree .indo.. -elect 6dit -S #references -S General and change the tool bar buttons so that they display only te0t$ not icons. Clic2 :pply and loo2 at the tool bar buttons in the main .indo.. ;eturn to the #references dialog and change the tool bar buttons bac2 to the default setting by clic2ing Default. (rom the tool bar$ select 4ptions and select the NTypeO item in the :ccount (ields to display option. The main .indo. should no. loo2 li2e this=

This image sho.s the effect of changing the display options. -a,e your file. 4. /f you plan to import A/( data from another program$ letFs try a practice file first. )/f not$ s2ip to the ne0t chapter on account setup.* (irst$ create a ne. file called gcashimport. (rom the main menu$ select (ile -S /mport -S /mport A/(... to start the import. 8hen you are prompted for a filename$ select )KKKGnuCash should ha,e a sample A/( file a,ailable for this tutorial - can that be done easilyK* !oad the file and loo2 at the results of the account match. Complete the import and ta2e a loo2 at the results. The main .indo. should no. loo2 li2e this= )K/nsert a screen shot here that corresponds to an imported test file* -a,e your file.

Chapter 4 )ccounts
Table of Contents 1asic :ccounting Concepts

1alance -heet :ccounts /ncome and 60pense :ccounts GnuCash :ccounts 1alance -heet :ccounts /ncome and 60pense :ccounts #utting /t :ll Together -imple 60ample The 1asic Top !e,el :ccounts 5a2ing -ub-:ccounts This chapter .ill discuss some useful concepts for organiJing your accounts. -ince GnuCash does not impose any specific account tree layout$ you are free to design your account structure in any manner you .ish. <o.e,er$ there are a fe. basic accounting concepts .hich you .ill probably .ant to follo. .hen designing your accounts to ma0imiJe their utility.

(asic )ccounting Concepts

:s .e sa. in the pre,ious chapter$ accounting is based on E basic account types= :ssets$ !iabilities$ 6Guity$ /ncome and 60penses. 8e .ill no. e0pand on our understanding of these account types$ and sho. ho. they are represented in GnuCash. 1ut first$ letFs di,ide them into 2 groups$ the balance sheet accounts and the income and e0pense accounts.

(alance 'heet )ccounts

The three so-called !alance %heet (ccounts are :ssets$ !iabilities$ and 6Guity. 1alance -heet :ccounts are used to trac2 the changes in ,alue of things you o.n or o.e. :ssets is the group of things that you o.n. 3our assets could include a car$ cash$ a house$ stoc2s$ or anything else that has con,ertible ,alue. Con,ertible ,alue means that theoretically you could sell the item for cash. !iabilities is the group of things on .hich you o.e money. 3our liabilities could include a car loan$ a student loan$ a mortgage$ your in,estment margin account$ or anything else .hich you must pay bac2 at some time. 6Guity is the same as >net .orth.> /t represents .hat is left o,er after you subtract your liabilities from your assets. /t can be thought of as the portion of your assets that you o.n outright$ .ithout any debt.

#ncome and $9pense )ccounts

The t.o /ncome and 60pense :ccounts are used to increase or decrease the ,alue of your accounts. Thus$ .hile the balance sheet accounts simply track the ,alue of the things you o.n or o.e$ income and e0pense accounts allo. you to change the ,alue of these accounts. /ncome is the payment you recei,e for your time$ ser,ices you pro,ide$ or the use of your money. 8hen you recei,e a paychec2$ for e0ample$ that chec2 is a payment for labor you pro,ided to an employer. 4ther e0amples of income include commissions$ tips$ di,idend income from stoc2s$ and interest income from ban2 accounts. /ncome .ill al.ays increase the ,alue of your :ssets and thus your 6Guity. 60penses refer to money you spend to purchase goods or ser,ices pro,ided by someone else. 60amples of e0penses are a meal at a restaurant$ rent$ groceries$ gas for your car$ or tic2ets to see a play. 60penses .ill al.ays decrease your 6Guity. /f you pay for the e0pense immediately$ you .ill decrease your :ssets$ .hereas if you pay for the e0pense on credit you increase your !iabilities.

GnuCash )ccounts
This section .ill sho. ho. the GnuCash definition of an account fits into the ,ie. of the E basic

accounting types. 1ut first$ letFs begin .ith a definition of an account in GnuCash. : GnuCash account is an entity .hich contains other sub-accounts$ or that contains transactions. -ince an account can contain other accounts$ you often see account trees in GnuCash$ in .hich logically associated accounts reside .ithin a common parent account. : GnuCash account must ha,e a uniGue name )that you assign* and one of the predefined GnuCash >account types>. There are a total of "3 account types in GnuCash. These "3 account types are based on the E basic accounting types$ the reason there are more GnuCash account types than basic accounting types is that this allo.s GnuCash to perform specialiJed trac2ing and handling of certain accounts. There are H asset accounts )"ash$ !ank$ %tock$ Mutual Fund$ "urrency$ (ccounts $ecei.a*le$ and (sset *$ 3 liability accounts )"redit "ard$ (ccounts ,aya*le$ and 'ia*ility$ *$ " eGuity account )E2uity*$ " income account )Income*$ and " e0pense account )Expense*. These GnuCash account types are presented in more detail belo..

(alance 'heet )ccounts

The first balance sheet account .e .ill e0amine is (ssets$ .hich$ as you remember from the pre,ious section$ refers to things you o.n. To help you organiJe your asset accounts and to simplify transaction entry$ GnuCash supports se,eral types of asset accounts= ". Cash 'se this account to trac2 the money you ha,e on hand$ in your .allet$ in your piggy ban2$ under your mattress$ or .here,er you choose to 2eep it handy. This is the most li2uid$ or easily traded$ type of asset. 2. 1an2 This account is used to trac2 your cash balance that you 2eep in institutions such as ban2s$ credit unions$ sa,ings and loan$ or bro2erage firms - .here,er someone else safeguards your money. This is the second most li2uid type of account$ because you can easily con,ert it to cash on hand. 3. -toc2 Trac2 your indi,idual stoc2s and bonds using this type of account. The stoc2 accountFs register pro,ides e0tra columns for entering number of shares and price of your in,estment. 8ith these types of assets$ you may not be able to easily con,ert them to cash unless you can find a buyer$ and you are not guaranteed to get the same amount of cash you paid for them. 4. 5utual (und This is similar to the stoc2 account$ e0cept that it is used to trac2 funds. /ts account register pro,ides the same e0tra columns for entering share and price information. (unds represent o.nership shares of a ,ariety of in,estments$ and li2e stoc2s they do not offer any guaranteed cash ,alue. E. Currency /f you trade other currencies as in,estments$ you can use this type of account to 2eep trac2 of them. The register is similar to the stoc2 register$ e0cept that you enter e0change rates instead of prices. 7. :ccounts ;ecei,able ):%;ecei,able* This is typically a business use only account in .hich you place outstanding debts o.ed to you. /t is considered an asset because you should be able to count in these funds arri,ing. H. :sset (or personal finances$ use this type of account to trac2 >big-tic2et> item purchases that significantly impact your net .orth. Generally$ you can thin2 of these as things you insure$ such as a house$ ,ehicles$ 9e.elry$ and other e0pensi,e belongings.

Tip
(or all GnuCash asset accounts$ a de*it )left-column ,alue entry* increases the account balance and a credit )right-column ,alue entry* decreases the balance. )-ee note later in this chapter.*

The second balance sheet account is 'ia*ilities$ .hich as you recall$ refers to .hat you o.e$ money you ha,e borro.ed and are obligated to pay bac2 some day. These represent the rights of your lenders to obtain repayment from you. Trac2ing the liability balances lets you 2no. ho. much debt you ha,e at a gi,en point in time. GnuCash offers three liability account types= ". Credit Card 'se this to trac2 your credit card receipts and reconcile your credit card statements. Credit cards represent a short-term loan that you are obligated to repay to the credit card company. This type of account can also be used for other short-term loans such as a line of credit from your ban2. 2. :ccounts #ayable ):%#ayable* This is typically a business use only account in .hich you place bills you ha,e yet to pay. 3. !iability 'se this type of account for all other loans$ generally larger long-term loans such as a mortgage or ,ehicle loan. This account can help you 2eep trac2 of ho. much you o.e and ho. much you ha,e already repaid.

Tip
!iabilities in accounting act in an opposite manner from assets= credits )right-column ,alue entries* increase liability account balances and de*its )left-column ,alue entries* decrease them. )-ee note later in this chapter* The final balance sheet account is E2uity$ .hich is synonymous .ith >net .orth>. /t represents .hat is left o,er after you subtract your liabilities from your assets$ so it is the portion of your assets that you o.n outright$ .ithout any debt. /n GnuCash$ use this type of account as the source of your opening ban2 balances$ because these balances represent your beginning net .orth. There is only a single GnuCash eGuity account$ called naturally enough$ 6Guity.

Tip
/n eGuity accounts$ credits increase account balances and debits decrease them. )-ee note later in this chapter*

,ote
The accounting eGuation that lin2s balance-sheet accounts is :ssets U !iabilities Q 6Guity or rearranged :ssets - !iabilities U 6Guity. -o$ in common terms$ the things you o/n minus the things you o/e eGuals your net /orth.

#ncome and $9pense )ccounts

Income is the payment you recei,e for your time$ ser,ices you pro,ide$ or the use of your money. /n GnuCash$ use an /ncome type account to trac2 these.

Tip
Credits increase income account balances and debits decrease them. :s described in Chapter 2$ credits represent money transferred #rom an account. -o in these special income accounts$ .hen you transfer money #rom )credit* the income account to another account$ the balance of the income account increases. (or e0ample$ .hen you deposit a paychec2 and record the transaction as a transfer from an income account to a ban2 account$ the balances of both accounts increase. Expenses refer to money you spend to purchase goods or ser,ices pro,ided by someone else. /n GnuCash$

use an 60pense type account to trac2 your e0penses.

Tip
Debits increase e0pense account balances and credits decrease them. )-ee note later in this chapter.*

,ote
8hen you subtract total e0penses from total income for a time period$ you get net income. This net income is then added to the balance sheet as retained earnings$ .hich is a type of 6Guity account. )/nsert a chart that sho.s common accounts and recommended account types for these* 3ore on 1ebits and Credits ;emember the terms debit and credit discussed in Chapter 2K Contrary to popular belief and e,en some dictionary definitions$ accounting debits and credits do not mean decrease and increase. The only constant definition of debits and credits is that debits are left-column entries and credits are right-column entries. /n fact$ debits and credits each increase certain types of accounts and decrease others. /n asset and e0pense type accounts$ debits increase the balance and credits decrease the balance. /n liability$ eGuity and income type accounts$ credits increase the balance and debits decrease the balance. (or e0ample$ debits increase your ban2 account balance and credits decrease your ban2 account balance. 8ait a minute$ you might say$ a de*it card decreases the balance in my chec2ing account$ because / ta2e money out of it. :nd .hen the ban2 gi,es me money bac2 on something$ they credit my account. -o .hy is this re,ersed in accountingK 1an2s report transactions from their perspecti,e$ not yours. Their perspecti,e is e0actly opposite to yours. To you$ your ban2 account represents an asset$ something you o.n. To the ban2$ your ban2 account represents a loan$ or liability$ because they o.e you that money. :s e0plained in this chapter$ asset and liability accounts are e0act opposites in the .ay they beha,e. /n a liability account$ debits decrease the balance and credits increase the balance. 8hen you ta2e money out of your ban2 account$ the balance in your account decreases. To you$ this is a decrease in an asset$ so you credit your ban2 account. To the ban2$ this is a decrease in a liability$ so they de*it your ban2 account.

5utting #t )ll Together

!etFs go through the process of building a common personal finance chart o# accounts using the information .e ha,e learned from this chapter. : chart of accounts is simply a ne. GnuCash file in .hich you groups your accounts to trac2 your finances. /n building this chart of accounts$ the first tas2 is to di,ide the items you .ant to trac2 into the basic account types of accounting. This is fairly simple$ letFs go through an e0ample.

'imple $9ample
!et us assume you ha,e a chec2ing and a sa,ings account at a ban2$ and are employed and thus recei,e a paychec2. 3ou ha,e a credit card )+isa*$ and you pay monthly utilities in the form of rent$ phone$ and electricity. &aturally$ you also need to buy groceries. (or no.$ .e .ill not .orry about ho. much money you ha,e in the ban2$ ho. much you o.e on the credit card$ etc. 8e .ant to simply build the frame.or2 for this chart of accounts. 3our assets .ould be the ban2 sa,ings and chec2ing account. 3our liabilities are the credit card. 3our 6Guity .ould be the starting ,alues of your ban2 accounts and credit card ).e do not ha,e those amounts yet$ but .e 2no. they e0ist*. 3ou ha,e income in the form of a salary$ and e0penses in the form of

groceries$ rent$ electricity$ phone$ and ta0es )(ederal$ -ocial -ecurity$ 5edicare* on your salary. -imple$ isnFt itK

The (asic Top Level )ccounts

&o.$ .e must decide ho. you .ant to group these accounts. 5ost li2ely$ you .ant your assets groups together$ your liabilities grouped together$ your 6Guity grouped together$ your income grouped together$ and your e0penses grouped together. This is the most common .ay of building a GnuCash chart of accounts$ and it is highly recommended that you al.ays begin this .ay. -tart .ith a clean GnuCash file )do not select any predefined accounts* and build this basic starting account structure )(ile -S &e. :ccount...*. ". :ccount name :ssets )account type :ssets$ parent account &e. top le,el account* 2. :ccount name !iabilities )account type !iabilities$ parent account &e. top le,el account* 3. :ccount name 6Guity )account type 6Guity$ parent account &e. top le,el account* 4. :ccount name /ncome )account type /ncome$ parent account &e. top le,el account* E. :ccount name 60penses )account type 60penses$ parent account &e. top le,el account*

This image sho.s the basic top-le,el accounts.

3aking 'ub6)ccounts
8e can no. add to this basic top-le,el tree structure by inserting some real transaction-holding subaccounts. &otice that the ta0 accounts are placed .ithin a sub-account named >Ta0es>. 3ou can ma2e sub-accounts .ithin sub-accounts. This is typically done .ith a group of related accounts )such as ta0 accounts in this e0ample*. ". :ccount name Chec2ing )account type 1an2$ parent account :sset* 2. :ccount name -a,ings )account type 1an2$ parent account :sset* 3. :ccount name +isa )account type Credit Card$ parent account !iabilities* 4. :ccount name -alary )account type /ncome$ parent account /ncome* E. :ccount name #hone )account type 60penses$ parent account 60penses* 7. :ccount name 6lectricity )account type 60penses$ parent account 60penses* H. :ccount name ;ent )account type 60penses$ parent account 60penses* D. :ccount name Groceries )account type 60penses$ parent account 60penses* I. :ccount name Ta0es )account type 60penses$ parent account 60penses* "0. :ccount name (ederal )account type 60penses$ parent account 60penses=Ta0es*

"". :ccount name -ocial -ecurity )account type 60penses$ parent account 60penses=Ta0es* "2. :ccount name 5edicare )account type 60penses$ parent account 60penses=Ta0es* "3. :ccount name -tarting 1alances )account type 6Guity$ parent account 6Guity*

This image sho.s a simple chart of accounts. -a,e this chart of accounts some.here$ as .e .ill continue to use it in the later chapters. 3ou ha,e no. created a chart of accounts to trac2 a simple household budget. 8ith this basic frame.or2 in place$ .e can no. begin to populate the accounts .ith transactions. The ne0t chapter .ill co,er this sub9ect in greater detail.

Chapter < Transactions

Table of Contents 1asic Concepts The :ccount ;egister -imple Transaction -plit Transaction (eatures of the :ccount ;egister Choosing a ;egister -tyle 'sing 6ntry -hortcuts ;econciliation ;econcile 8indo. -cheduled Transactions Creating from the !edger Creating from the 6ditor #utting /t :ll Together 4pening 1alances :dditional Transaction 60amples This chapter .ill gi,e you the basic information you need to understand and use transactions in GnuCash.

8hereas accounts are the frame.or2 and structure of a chart of accounts$ transactions are the data .hich fills each account.

(asic Concepts
: transaction in a double entry accounting system such as GnuCash is an e0change bet.een at least 2 accounts. Thus$ a single transaction must al.ays consist of at least t.o parts$ a >from> and a >to> account. The >from> account is passing ,alue to the >to> account. :ccountants call these parts of a transaction 'edger Entries. /n GnuCash$ they are called %plits. (or e0ample$ you recei,e a paychec2 and deposit it into your sa,ings account at the ban2. The transaction that occurs is that your ban2 sa,ings account )an asset* recei,ed money from your income account. T.o accounts are affected$ and in this case there is a net increase in your eGuity. 8or2ing .ith transactions in GnuCash is performed using .hat is 2no.n as the account register. 6,ery account you create has an account register. /t .ill appear familiar to you as it loo2s ,ery similar to the log used to trac2 chec2boo2s.

The )ccount Register

The account register is the GnuCash .indo. .hich allo.s you to ,ie. or edit pree0isting transactions$ or add ne. transactions for a particular account. To enter the account register$ simply highlight the account name in the account tree .indo. and double-clic2 to open it. 3ou can also clic2 the 4pen button in the tool bar or use the right mouse button menu to open the account. GnuCash .ill display the account register .indo..

'imple Transaction
(or e0ample$ starting .ith the chart of accounts .e created in the pre,ious chapter$ double clic2 on the chec2ing asset account. !etFs add a simple transaction to the chec2ing account. 8hen you first create your accounts in GnuCash$ it is common to start them off .ith an initial balance. /n the first transaction ro.$ enter a date )eg= une "$ 2003*$ a description )eg= >4pening 1alance>*$ clic2 on the Transfer pop-up menu and select 6Guity=-tarting 1alances$ add a deposit ,alue of R"000$ and press the 6nter 2ey. The account register should no. appear similar to this figure=

This image sho.s :sset=Chec2ing - ;egister after inserting a starting ,alue transaction. -etting the starting balances of an account is an e0ample of a simple t.o account transaction. /n this case$ affecting the :sset=Chec2ing and the 6Guity=-tarting 1alances accounts. :s another e0ample of a simple 2 account transaction$ add another transaction to describe the purchase of R4E.2" .orth of groceries. (rom .ithin the :sset=Chec2ing account$ you .ould set Transfer to 60penses=Groceries. The account register should no. appear=

This image sho.s :sset=Chec2ing - ;egister after adding a transaction for groceries.

'plit Transaction
The need for 3 or more account transactions occurs .hen you need to split either the >from> or the >to> account in a transaction into multiple accounts. The classic e0ample of this is .hen you recei,e a paychec2. 3our ta2e home pay from a paychec2 .ill typically be less than your net pay$ .ith the difference being due to ta0es$ retirement account payments$ and%or other items. Thus$ the single transaction of you recei,ing a paychec2 in,ol,es other accounts besides simply :ssets=Chec2ing and /ncome=-alary. To add a paychec2 transaction from the :ssets=Chec2ing account register .indo.$ clic2 on a ne. transaction line$ and clic2 on -plit. (irst enter the description of this transaction on the first line )eg= >6mployers ; 's>*. /n the >split> line belo. this$ the the gross total of your paychec2 )eg= R"000* as a .ithdra.al transfer from /ncome=-alary. &o.$ indi,idually insert deposits to :sset=Chec2ing )eg= R7H0*$ 60penses=Ta0es=(ederal )eg= R"D0*$ 60penses=Ta0es=5edicare )eg= RI0*$ and 60penses=Ta0es=-ocial -ecurity )eg= R70*. The final split should loo2 li2e this=

This image sho.s :sset=Chec2ing - ;egister after adding a split transaction for salary.

Features of the )ccount Register

The title bar of the account register displays the account name$ .hich in this case is :sset=Chec2ing. 1elo. the title bar$ the menu bar displays the menu items a,ailable .ithin the account register$ and the

tool bar contains handy buttons that help you .or2 .ith the account register. :lthough each transaction has at least t.o splits$ all you see in the basic register is a summary of the splits affecting the current account. /n the Transfer column$ you can see the other account from .hich money is trans#erred into or out of this account. /f the transaction affects more than t.o accounts$ GnuCash displays -- -plit Transaction -- to sho. it is a multiple-split transaction. 3ou can see the indi,idual splits of each transaction by clic2ing the -plit button in the tool bar .hile selecting the appropriate transaction. (or split transactions$ the first line of the transaction is the transaction line. /t contains a Date$ optional &um )such as a chec2 number*$ transaction Description$ total amount affecting the current account )Tot Deposit here*$ and updated account 1alance after the current transaction. &ote that in the e0panded ,ie.$ the Transfer column heading disappears$ and there is no account name listed in that field. This line sho.s you only a summary of the transactionFs effect on the current account. (or more detailed information$ you need to loo2 at the indi,idual splits that ma2e up the transaction. The partial lines belo. the transaction line are the split lines$ and they are separated by gray lines. :s you highlight one of the split lines$ the column headings change to sho. the split-related fields=

This image sho.s ho. split headings change. 6ach split contains an optional :ction$ or type of split$ .hich you can either type in or choose from a pull-do.n list. The split also contains an optional 5emo .hich describes the split. 6ach split affects an :ccount$ .hich can be selected from a pull-do.n list of your accounts. The ; field indicates .hether the split has been reconciled. The last t.o columns sho. the amount of the split and .hether money is coming into or going out of the account. :s .e discussed in section 2."$ total debits )left-column entries* must eGual total credits )right-column entries* for each transaction. /n the e0ample sho.n abo,e$ the total debits eGual the total credits$ so this transaction is balanced. /f you notice$ the transaction line contains the same debit amount as the Chec2ing split line. 8hy is this sho.n t.iceK 1ecause the transaction line is merely a summary of the transactionFs effect on the current account. The same transaction in a different account .ill ha,e a different transaction line$ one that sho.s the effect on that particular account. 3ou can see this by highlighting another split line and clic2ing the ump button on the tool bar. /n this e0ample$ if you 9ump to the /ncome=-alary account$ GnuCash brings up the same transaction in the /ncome=-alary - ;egister=

This image sho.s a 9ump to the /ncome=-alary account. &ote that the transaction line total no. summariJes the effect on the /ncome=-alary account instead of the Chec2ing :ccount$ because you are loo2ing at the /ncome=-alary account register. The splits are e0actly the same$ but the transaction line no. reflects the credit to the /ncome=-alary account. :t the bottom left of the register .indo.$ GnuCash displays helpful messages as you mo,e about the register. To the right$ you can see the current account balance and the total of cleared splits.

Choosing a Register 'tyle

GnuCash offers se,eral options for ,ie.ing your registers. The default style is 1asic !edger mode$ .hich displays only the summary of splits affecting the current account. This is the style that most closely resembles other popular personal financial pac2ages. 3ou can choose a different register style by selecting +ie. -S -tyle from the menu. The :uto--plit !edger style e0pands the current transaction automatically. :s you highlight a ne. transaction in the register$ the transaction automatically e0pands to sho. all splits. The Transaction ournal style is more li2e an accounting 9ournal$ in .hich all splits are sho.n for all transactions. :ll styles permit you to ,ie. your data in either single-line or double-line format. /n the +ie. -S -tyle menu item$ chec2 the bo0 ne0t to Double !ine$ and you .ill see your transaction line e0pand to t.o register lines.

%sing $ntry 'hortcuts

GnuCash pro,ides se,eral time-sa,ing shortcuts for entering your data. 8hen you type the first fe. characters of a description that you ha,e used before$ the Auic2(ill feature automatically fills in the rest of the transaction as you last entered it. 8hen you type in the first characters of an account name in either the Transfer field of the transaction line or the :ccount field of the split line$ Auic2(ill .ill automatically complete the name from your account list. /t also helps you .ith entering sub-accounts in these fields= simply type the first characters of the parent account name follo.ed by a colon and the first characters of the sub-account name. (or e0ample$ to enter :ssets=Chec2ing$ you might type A:C and let GnuCash fill in the rest. ;egister 2eyboard shortcuts also sa,e you time$ and GnuCash pro,ides se,eral of them. /n the date field$ you can type=

= or > to increment the date and 6 or ? to decrement the date

@ or A to increment the month and B or C to decrement the month 3 or m to enter the first date of the month H or h to enter the last date of the month & or y to enter the first date of the year R or r to enter the last date of the year T or t to enter todayFs date

/n the &um field of the transaction line$ you can type = to increment the transaction number from the last one you typed in. Typing 6 .ill decrement the number. This .ill also .or2 in the :ction field of the split line$ if you choose to enter split numbers there. The :ction field also supports Auic2(ill - if you type the first characters of a common action )such as Deposit*$ GnuCash .ill fill in the rest. /n any of the amount fields$ you can use a built-in calculator. -imply type in the first ,alue$ follo.ed by =$ 6$ D$ or E$ then type in the second ,alue. GnuCash .ill perform the calculation and return the resulting ,alue to the amount field .hen you press the Tab 2ey. 5ost of the menu items ha,e 2eyboard shortcuts$ and these are mar2ed by underlined characters in the menu names. #ress )lt Q Vunderlined characterW to bring up the menu$ then select an item by typing its underlined character. (or e0ample$ typing )lt-T brings up the Transaction menu$ then typing ' .ill split the transaction. : fe. of the menu items use Ctrl 2ey shortcuts instead$ and these are listed ne0t to the item. To mo,e around the register$ use these 2eys to sa,e time=

Tab to mo,e to the ne0t field$ 'hift-Tab to mo,e to the pre,ious field Home to mo,e to the beginning of the field$ $nd to mo,e to the end of the field $nter or X to mo,e to the ne0t transaction$ Y to mo,e to the pre,ious transaction 5age %p to mo,e up one screen$ 5age 1o"n to mo,e do.n one screen 'hift-5age %p to go to the first transaction$ 'hift-5age 1o"n to go to the last transaction Tab mo,es to the ne0t bo0 and 'hiftTab mo,es to the pre,ious bo0 -pace bar toggles the status bet.een reconciled and not reconciled Y and X na,igate through the entries .ithin the current bo0

/n the ;econcile .indo. you can use these 2eyboard shortcuts=

Reconciliation
Transactions are typically chec2ed against ban2 statements - a process 2no.n as >reconciliation>. GnuCash 2eeps trac2 of the reconciliation status of each transaction. The reconciliation status of a transaction is sho.n by the reconciliation );* field. FyF indicates that a transaction has been reconciled$ FnF indicates that it has not$ and FcF indicates that it has been cleared$ but not reconciled. 3ou can toggle the reconciliation status bet.een FnF and FcF by clic2ing in the );* fieldC you can set it to FyF by using the ;econciliation 8indo.. :t the bottom of the account .indo.$ there are t.o running totals= F1alanceF$ and FClearedF. FClearedF should correspond to ho. much money the ban2 thin2s you ha,e in your account$ .hile F1alanceF includes outstanding transactions.

Reconcile *indo"
The ;econciliation 8indo. is used to reconcile a GnuCash account .ith a statement that a ban2 or other institution has sent you. ;econciliation is useful not only to double-chec2 your records against those of your ban2$ but also to get a better idea of outstanding transactions$ e.g. uncashed chec2s.

:t the bottom of the account .indo.$ there are t.o running balances= the >cleared and reconciled> balance$ and the >total> balance. The >cleared and reconciled> balance should correspond to ho. much money the ban2 thin2s you ha,e in your account$ and the >total> balance includes outstanding transactions. (or e0ample$ .hen you .rite a chec2 for something$ you should enter the transaction into GnuCash. The reconciliation );* field of the transaction .ill initially contain n )ne.*. 3our ne. entry .ill contribute to the >total> balance$ but not to the >cleared and reconciled> balance. !ater$ if you thin2 that the chec2 has been cashed$ you might clic2 on the transactionFs ; field to change it to c )cleared*. 8hen you do this$ the >cleared and reconciled> balance .ill change to include this amount. 8hen the ban2 statement arri,es$ you can then compare it to .hat youF,e recorded in GnuCash in the ;econciliation .indo.. There$ you .ill be able to change the ; field to y )reconciled*. 3ou cannot reconcile in the register .indo.$ you must use the reconciliation .indo.. 4nce a transaction has been mar2ed >reconciled>$ it can no longer be easily changed. To use the ;econciliation 8indo.s$ select an account from the account tree and clic2 on :ctions -S ;econcile. : .indo. .ill appear in .hich you can enter the reconcile information.

The initial reconcile .indo..

$econcile In#o7 %tatement Date - this is the date of the statement you .ill be reconciling against. $econcile In#o7 %tarting !alance - this is a non-editable item .hich displays the balance from the pre,ious reconciliation. /t should match the starting balance in your statement. $econcile In#o7 Ending !alance - this is the ending balance as it appears in the statement. $econcile In#o7 Include %u*)accounts - select this if you .ant to include the sub-accounts of the currently selected account in this reconciliation. Enter Interest ,ayment - clic2 here to enter an interest payment to @@@ )KK*.

Clic2 on the 42 button$ and you .ill see the transactions listing reconcile .indo.=

The transactions listing in the reconcile .indo.. The t.o lists called (unds /n and (unds 4ut lists all the unreconciled transactions. The F;F columns sho. .hether the transactions ha,e been cleared or reconciled. &o.$ e0amine each item on the ban2 statement$ and loo2 for the matching item in the ;econcile .indo.. /f you cannot find one$ then perhaps you forgot to enter a transaction$ or did not 2no. that the transaction had happened. 3ou can use the &e. button on the tool bar$ or the &e. menu item in the Transaction menu$ to open a register .indo. and enter the missing transaction. The ne. item .ill appear in the ;econcile .indo. .hen you press enter after entering the transaction. 8hen you find the item in the ;econcile .indo.$ compare the amount in the item to the amount on the statement. /f they disagree$ you may ha,e made an error .hen you entered the transaction in GnuCash. 3ou can use the 6dit button on the tool bar$ or the 6dit menu item in the Transaction menu$ to open a register .indo. and correct the transaction. /f the amounts agree$ clic2 on the item in the ;econcile .indo.. The F;F column .ill change to FyF )reconciled* from FnF or FcF. 3ou then repeat this for each item that appears on the ban2 statement$ ,erifying that the amounts match .ith the amounts in GnuCash$ and mar2ing off transactions in GnuCash as they are reconciled. :t the bottom of the >;econcile> .indo. is a >Difference> field$ .hich should sho. R0.00 .hen you are done reconciling. /f it sho.s some other ,alue$ then either you ha,e missed transactions$ or some amounts may be incorrect in GnuCash. )4r$ less li2ely$ the ban2 may ha,e made an error.* 8hen you ha,e mar2ed off all the items on the ban2 statement$ and .hen the difference is R0.00$ press the (inish button on the tool bar or select (inish from the ;econcile menu )the latter method .ill .or2 e,en if your >Difference> isnFt R0.00*. The ;econcile .indo. .ill close. /n the ;egister .indo.$ the ; field of the reconciled transactions .ill change to FyF.

'cheduled Transactions
-cheduled transactions is made to help entering repetiti,e money operations$ li2e subscriptions$ insurances or ta0es. 1y using scheduled transactions$ you only ha,e to enter the concerned transaction once$ set a fe. parameters li2e start date$ freGuency and a little description$ and then GnuCash .ill tell you .hene,er a scheduled transaction is ready to create$ and create it for you. /n this ho.to$ .eFll ta2e a monthly /nternet subscription of 20 6'; as e0ample$ .hich is ta2en on the first day of each month. /n GnuCash$ there are t.o .ays of creating scheduled transactions$ from the ledger or from the scheduled transactions editor.

Creating from the Ledger

6nter the first occurence of your to-schedule transaction in the ledger.

-tep one creating scheduled transaction from the ledger Then you right clic2 on your transaction and select >-chedule...>

-tep t.o creating scheduled transaction from the ledger : .indo. li2e this .ill appear=

-tep three creating scheduled transaction from the ledger !etFs fill the ,alues$ .e 2no. that the subscription is ta2en on the first of each month$ and the ne0t one is for ne0t month )since .e entered the one for this month manually* =

(illing in data to a scheduled transaction Clic2 the 4? button$ and the transaction .ill be scheduled. GnuCash no. has memoriJed this scheduled transaction and on the first of ne0t month$ it .ill pop up a .indo. as2ing if it should create it )see far belo. for a screenshot of this .indo.*.

Creating from the $ditor

:nother .ay of entering a scheduled transaction is from the -cheduled Transaction 6ditor$ it may be faster if .e ha,e se,eral scheduled transactions to create at once. (rom the main accounts .indo.s$ go in the :ctions menu$ select -cheduled Transactions$ a submenu .ill open in .hich youFll clic2 -cheduled transaction 6ditor.

-tep one creating scheduled transaction from the editor : .indo. li2e this .ill pop up =

-tep t.o creating scheduled transaction from the editor This .indo. contains a list$ no. empty$ of all the scheduled transactions. !etFs create a ne. one by clic2ing on the >&e.> button$ another .indo. .ill pop up =

-tep three creating scheduled transaction from the editor This .indo. mays seem complicated but itFs fairly eay to understand. (irst$ letFs enter a name for this ne. scheduled transaction$ this name .ill only identify it in the -cheduled Transaction 6ditor$ it .ill ne,er appear in the ledger. Then .eFll enter the transactionFs parameters. 8e 2no. that the subscription is ta2en on the first day of each month$ so the start date .ill be &o, "$ 2003 )assuming no,ember is the ne0t month*$ the freGuency .ill be >5onthly>$ it .ill be ta2en e,ery month on the "st. /n the >4ptions> tab you ha,e three options =

>Create automatically> .ill insert this transaction in the ledger .ithout as2ing you before )see belo.* >Create n days in ad,ance> is e0plicit >;emind me n days in ad,ance> is e0plicit and used for e0ample .hen you ha,e to pay something by chec2$ GnuCash can remind you one .ee2 before so you send your chec2 before the deadline.

The 6nd tab allo.s you to tell GnuCash that this scheduled transaction .onFt last for e,er$ for e0ample if you are repaying a loan$ you can enter the loan end date. -ince in our e0ample the internet subscription is automatically ta2en from the account$ .e ha,e no need to create it in ad,ance$ nor gi,e an end date.

(inally$ enter your transaction in the lo.er part as you .ould do in the ledger$ .ith the only difference of ha,ing no date.

,ote
8arning= donFt use the 6&T6; 2ey li2e in the ledger$ as it .ill acti,ate the default button of the .hole .indo. = Cancel. /nstead$ use T:1 to go to the ne0t field$ and .hen you ha,e finished entering your transaction$ clic2 on the >6nter> button to ,alidate it.

,ote
&ote= /n the ,ersion / ha,e )".D.E* the >Debit (ormula> and >Credit (ormula> are s.apped$ so / typed 20 as debit for my ban2 account$ but youFll see belo. that it .ill be recorded as funds in. !oo2 in your ,ersion if the bug is still here$ and remember that the debit column is the right one$ and the credit the left one. &o.$ you should ha,e a .indo. li2e this=

+alidate a scheduled transaction from the editor

3ou ha,e to ,alidate the transaction you 9ust entered$ li2e in the ledger$ before clic2ing the 4? button. 5any users reported problems creating scheduled transactions because they .ere not ,alidating the template$ and the scheduled transaction .as not created. &o. clic2 4?$ it ta2es you to the pre,ious .indo.$ no. .ith one item in the list =

+alidate a scheduled transaction from the editor /f you clic2 in the calendar part on the first day of one month$ a small .indo.$ follo.ing your mouse$ .ill sho. you .hat is planned for this day. 3ou can no. close the -cheduled Transaction 6ditor .indo.$ and sa,e your .or2. (rom no. on$ on each first day of month )or the ne0t time you launch GnuCash after this day* a .indo.s .ill pop up to remind you to create this transaction =

-cheduled transaction popup reminder 3ou can clic2 on the list entry to see the detailed transaction in the lo.er part$ then 9ust clic2 on &e0t to ad,ance. 8hen you clic2 &e0t$ a .indo. summaring all transactions to be created .ill appear =

-cheduled transaction summary /n this .indo. you can ad9ust the transactions that .ill be created. (or e0ample$ this month my /-# made

a special offer and my subscription only costed "06';$ so / 9ust modified the amount from 20 to "0. 8hen you ha,e finished .ith this .indo.$ 9ust clic2 >(inish>. The .indo. .ill disappear and the transactions .ill be created. Then if you ta2e a loo2 in your ban2 account$ youFll see the transaction has been created =

-cheduled transaction created transaction

5utting #t )ll Together

/n the pre,ious sections of this chapter the concepts and mechanics of .or2ing .ith transactions in GnuCash has been discussed. This section .ill e0pand upon the chart of accounts initially built in the pre,ious chapter. -tart by opening your chart of accounts file. :ssuming you ha,e been follo.ing the progress of this e0ample chart of accounts$ you should ha,e 3 transactions already sa,ed .ithin the chec2ing account. The main .indo. should loo2 something li2e this=

This image sho.s the starting point for this section.

!pening (alances
:s sho.n earlier .ith the :sset=Chec2ing account$ the starting balances in an account are typically

assigned to a special account called 6Guity=-tarting 1alances. To start filling in this chart of account$ begin by setting the starting balances for the accounts. :ssume that there is R"000 in the sa,ings account and RE00 charged on the credit card. ". 4pen the :ssets=-a,ings account register. -elect +ie. -S -tyle from the menu and chec2 to ma2e sure you are in 1asic !edger style. 3ou .ill ,ie. your transactions in the other modes later$ but for no. letFs enter a basic transaction using the basic default style. 2. (rom the :sset=-a,ings account register .indo.$ enter a basic 2 account transaction to set your starting balance to R"000$ transferred from 6Guity=-tarting 1alances. ;emember$ basic transactions transfer money from a source account to a destination account. ;ecord the transaction )press the FenterF 2ey$ or clic2 on the FenterF icon*. 3. (rom the :sset=Chec2ing account register .indo.$ confirm that you ha,e already set the starting balance to R"000$ transferred from 6Guity=-tarting 1alances. This should already ha,e been done pre,iously from the e0ample earlier in this chapter$ but if not$ do so no.. 4. (rom the !iabilities=+isa account register .indo.$ enter a basic 2 account transaction to set your starting balance to RE00$ transferred from 6Guity=-tarting 1alances. This is done by entering the RE00 as a >decrease>$ since it is money you borro.ed. ;ecord the transaction )press the FenterF 2ey$ or clic2 on the FenterF icon*. 3ou should no. ha,e 3 accounts .ith opening balances set. :ssets=Chec2ing$ :ssets=-a,ings$ and !iabilities=+isa.

)dditional Transaction $9amples

&o. add some more transactions to simulate a monthFs e0penses. During the month$ RHD is spent on electricity$ R4E on phone$ and R3E0 on rent. :ll paid by chec2. (inally$ letFs mo,e R"00 from the sa,ings account to the chec2ing account. ". 4pen the 60penses=6lectricity account register and enter a simple 2 account transaction to pay the RHD electrical bill at the end of the current month )eg= une 30$ 2003*. 6nter a description )eg= !ight Company* and the chec2 number )eg= "0"*. The Transfer account should be :ssets=Chec2ing. 2. 4pen the :ssets=Chec2ing account register and enter a simple 2 account transaction to pay the R4E phone bill at the end of the current month )eg= une 30$ 2003*. 6nter a description )eg= #hone Company &ame* and the chec2 number )eg= "02*. The Transfer account should be 60penses=#hone. &otice that you can enter e0pense transactions from either the credit side )the e0pense accounts* or the debit side )the asset account*. 3. 4pen the 60penses=;ent account register and enter a simple 2 account transaction to pay the R3E0 in rent at the end of the current month )eg= une 30$ 2003*. 6nter a description )eg= une ;ent* and the chec2 number )eg= "0"*. The Transfer account should be :ssets=Chec2ing. Duplicate this transaction using the Duplicate button in the tool bar. -tart by clic2ing on the current rent transaction$ and clic2 on the Duplicate icon. 6nter the transaction date a month out in the future )eg= uly 3"$ 2003* and set the chec2 number )eg= "02*$ and notice the blue line separator that GnuCash uses to separate future transactions from current ones. /n this .ay$ you can enter transactions before they occur. 3ou could also set up a scheduled transaction to pay your rent$ since the ,alue of the rent is li2ely to be constant for the foreseeable future. (/@56$ add scheduled transaction stuff. 4. To transfer money from you sa,ings account to your chec2ing account$ open the :ssets=-a,ings account register$ add a ne. transaction setting the Transfer to :ssets=Chec2ing in the amount of R"00.

Chapter / Checkbook
Table of Contents -etting up :ccounts 6ntering Deposits 6ntering 8ithdra.als :T5%Cash 8ithdra.als ;econciling 3our :ccounts #utting /t :ll Together This chapter .ill gi,e you all the specific information you need to manage your chec2boo2 .ith GnuCash. 5anaging your chec2boo2 register is the first step of trac2ing your finances$ and GnuCash ma2es it much easier to manage than the traditional paper register does. (or one thing$ as discussed in Chapter 4$ data entry of common transactions is practically done for you in GnuCash$ because of its auto-completion feature. GnuCash 2eeps a running balance of each account$ and it ma2es reconciling these accounts easy. :nd the double-entry method helps you account for your spending by reGuiring a transfer account for .ithdra.als$ so you can easily find out ho. much money you spend in different areas. 4nce you are comfortable .ith using GnuCash for your chec2ing and other ban2 accounts$ you may .ish to continue on .ith trac2ing other financial accounts. Chapters 7 through I e0amine methods to manage your other accounts.

'etting up )ccounts
The first step in managing your chec2boo2 is to set up the necessary accounts. 3ou can either use the default GnuCash accounts or set up your o.n. (or more detail on ho. to set up a ne. account$ refer to -ection 3.3. (or instructions on importing your accounts from another program$ refer to -ection 2.4. !etFs start .ith the ban2 accounts youFll need. 3ou need one GnuCash ban2 type account for each physical ban2 account you .ish to trac2. /f you are setting up your o.n accounts or using the default GnuCash accounts$ ma2e sure that you ha,e an opening balance transaction for each ban2 account you o.n. The easiest .ay to get this number is to use the balance from your last ban2 statement as your opening balance. 3ou can enter this in the account information .indo. automatically as part of the &e. :ccount <ierarchy -etup druid$ or you can enter a manual transaction directly in the account. To enter the transaction manually$ enter a transfer from an 4pening 1alances account )type eGuity* to the ban2 account. The typical ban2 accounts you might trac2 include=

Chec2ing - any institutional account that pro,ides chec2-.riting pri,ileges. -a,ings - an interest-bearing institutional account usually used to hold money for a longer term than chec2ing accounts.

Common transactions that affect these ban2 accounts are payments and deposits. ,ayments are transfers of money out of the ban2 account$ usually to an e0pense account. Deposits are transfers of money into the ban2 account$ usually from an income account. 3ou .ill need to set up income and e0pense accounts to trac2 .here that money comes from and .here it goes. ;emember that a balanced transaction reGuires a transfer of an eGual sum of money from at least one account to at least one other account. -o if you deposit money in your chec2ing account$ you must also enter the account that money comes from. /f you pay a bill from your chec2ing account$ you must also enter the account .here that money goes.

$ntering 1eposits
5ost deposit transactions are entered as a transfer from an income account to a ban2 account. /ncome may come from many sources$ and itFs a good idea to set up a separate income type account for each

different source. (or e0ample$ your income may come mainly from your paychec2s$ but you may also recei,e interest on your sa,ings. /n this case$ you should ha,e one income account for salary and another income account for interest income.

Tip
1e sure to chec2 the Ta0-;elated bo0 in the :ccount /nformation Dialog .hen you set up ta0able income accounts. -ome types of income$ such as gift income$ may not be considered ta0able$ so chec2 the appropriate ta0 rules to determine .hat is ta0able. (or .ays to trac2 capital gains income$ refer to Chapter H. 1efore you start entering paychec2 deposits$ decide ho. much detail you .ant to trac2. The basic le,el of detail is to enter your net pay$ 9ust li2e you .ould in your paper register. This is easiest$ but you can get e,en more information out of GnuCash if you enter your gross pay .ith deductions. /t ta2es a bit more effort to enter the deductions$ but entering your ta0 .ithholding information throughout the year allo.s you to run useful ta0 status reports in GnuCash at any time. These reports can help you determine .hether you are .ithholding enough ta0$ and they can help you estimate your ta0 bill ahead of time. /f you are unsure about the le,el of detail$ start by entering net pay. 3ou can al.ays go bac2 and edit your transactions later if you decide you .ant more detail.

$ntering *ithdra"als
8hen you .ithdra. money from your ban2 account$ for .hate,er reason$ you are transferring money from your ban2 account to some other location. /n GnuCash$ this other location is trac2ed as an account. The more detailed accounts you create and use for your spending$ the more information you .ill get about .here your money goes. 8ithdra.als ta2e many forms. :T5 .ithdra.als are one of the most common transactions. 8riting chec2s is one .ay to .ithdra. money to pay bills$ to buy purchases$ or to gi,e to charity. Depending on your ban2$ you might also ha,e ser,ice charges$ .here the ban2 .ithdra.s the money from your account. Transfers of money out to another account are also .ithdra.als. 8e .ill ta2e a loo2 at each of these types of .ithdra.als and ho. to record them in GnuCash.

)T3ECash *ithdra"als
Cash .ithdra.als are handled as a transfer from a ban2 account to a cash account. GnuCash pro,ides special cash type accounts for trac2ing your cash purchases$ so you should set up a cash account to record your :T5 and other cash .ithdra.als. Cash accounts can be used for different le,els of detail. 4n a basic le,el of detail$ you simply transfer money to it from your chec2ing account. That tells you ho. much money you too2 out of chec2ing on a gi,en day$ but it doesnFt tell you .here that cash .as spent. 8ith a little more effort$ you can use the cash account to record your cash purchases as .ell$ so that you can see .here that cash .ent. 3ou record these purchases as a transfer from the cash account to e0pense accounts. -ome people record e,ery cash purchase$ but this ta2es a lot of .or2. :n easier .ay is to record the purchases for .hich you ha,e receipts$ but then ad9ust the balance of the account to match .hat is in your .allet. /tFs a good idea to at least set up a cash account for your .ithdra.als. Then if you decide to trac2 .here your cash goes$ you can enter transactions for the money you spend. 3ou determine .hat le,el of detail you .ant to use.

Reconciling &our )ccounts

GnuCash ma2es reconciliation of your ban2 account .ith your monthly ban2 statement much easier. -ection 4.7 gi,es instructions on ho. to reconcile your transactions .ith the monthly ban2 statement.

This is the main reconciliation tas2 that should be done e,ery month. 1ut .hat about all those other accounts you createdK -hould those be reconciled tooK /f you recei,e a statement for the account$ then you should consider reconciling that account. 60amples include the chec2ing account statement$ the sa,ings account statement$ and the credit card statement. Credit card statements and credit card transactions are co,ered in the ne0t chapter$ so if you are interested in trac2ing your credit cards in GnuCash$ ta2e a loo2 at the instructions pro,ided there. /ncome and e0pense accounts are usually not reconciled$ because there is no statement to chec2 them against. 3ou also donFt need to reconcile cash accounts$ for the same reason. 8ith a cash account$ though$ you might .ant to ad9ust the balance e,ery once in a .hile$ so that your actual cash on hand matches the balance in your cash account. :d9usting balances is co,ered in the ne0t section.

5utting #t )ll Together

/n Chapter 4$ you entered some transactions in your chec2ing account. /n this chapter$ .e .ill add more transactions and then reconcile them. -o$ letFs get started by opening the gcashdata file you sa,ed in the last chapter. 3our chart of accounts should loo2 li2e this= (/@56=insert chartaccts2.png

This image sho.s the Chec2ing :ccount ;egister. ". 4pen the -a,ings account and enter an opening balance transaction for R"000. To do this$ you .ill enter the transfer account as 4pening 1alances and the R"000 in the Deposit column= (/@56=insert sa,ings.png

This image sho.s the Chec2ing :ccount ;egister. 2. &o. open the Chec2ing account from the main .indo.. /n the last chapter$ you entered some paychec2 transactions as deposits into Chec2ing. &o. .e .ill enter another 2ind of deposit - a transfer of money from -a,ings into Chec2ing. 4n a blan2 line$ enter a transaction to transfer RE00 from -a,ings to Chec2ing. 3our Transfer account .ill be -a,ings$ since you are in the Chec2ing account. 3our Chec2ing account should no. loo2 li2e this= (/@56=insert transferin.png

This image sho.s the Chec2ing :ccount ;egister. 3. &o. letFs .rite some chec2s on this account. (irst$ .rite a chec2 to <omeTo.n Grocery for RHE. 3our transfer account is Groceries$ since all of this money is going to buy groceries. &e0t$ .rite a chec2 to :1C <ard.are for R"00$ and split this amount bet.een t.o e0penses= <ousehold RE0 and Tools RE0. 3ou .ill need to create an e0pense type account for each of these$ then enter splits for them. 3our chec2ing account should no. loo2 li2e thisC (/@56=insert chec2e0amp.png

This image sho.s the Chec2ing :ccount ;egister. 4. -uppose you no. need to .ithdra. some money. 3ou donFt ha,e a cash account set up in your chart of accounts$ so you .ill need to create one. Create the account as Cash as a top-le,el account of type cash. (rom your Chec2ing account register$ enter an :T5 type .ithdra.al to transfer R"00 from Chec2ing to Cash. (/@56=insert :T5.png

This image sho.s the Chec2ing :ccount ;egister. E. &o. .e are ready to reconcile this Chec2ing account$ using this sample ban2 statement= (/@56=insert a picture of a sample ban2 statement here

This image sho.s the Chec2ing :ccount ;egister. -elect :ccountZ;econcile... from the menu$ and fill in the Closing balance as R2720. Clic2 4? to begin reconciling the account. Chec2 off the entries as they appear on the sample statement. 8hen you ha,e chec2ed off all your entries$ the reconcile .indo. should loo2 li2e this= (/@56=insert recone0amp.png

This image sho.s the Chec2ing :ccount ;egister. &otice that your reconciled balance differs from your ending balance by RE.00. /f you loo2 at the sample ban2 statement$ you .ill see there is a RE.00 ser,ice charge that has not been added to your Chec2ing account. 7. -o clic2 on the Chec2ing register and add the RE.00 ser,ice charge to your Chec2ing account. 4n a blan2 line of the Chec2ing register$ enter a transaction to transfer RE.00 from Chec2ing to a -er,ice Charges account. ) 3ou .ill need to create the -er,ice Charges account as type e0pense.* 'se the transaction date printed on the sample statement as the date you enter for this transaction. 3our Chec2ing account should no. loo2 li2e this= (/@56=insert ser,ch.png

This image sho.s the Chec2ing :ccount ;egister. H. Clic2 bac2 on the ;econcile .indo.$ and you should see the ser,ice charge no. under (unds 4ut. Clic2 on it to mar2 it as reconciled$ and note that the difference amount belo. no. becomes 0.00. Clic2 the (inish button on the tool bar to complete the reconciliation. The ;econcile ; column in your Chec2ing register should no. sho. y for each transaction you 9ust reconciled. D. Go bac2 to the main .indo. and sa,e your file. 3our chart of accounts is steadily gro.ing$ and it should no. loo2 li2e this= (/@56=insert chartaccts3.png

This image sho.s the Chec2ing :ccount ;egister. &otice that you ha,e not yet used one of the accounts listed in your chart$ the Credit Card account. &o. that you 2no. ho. to 2eep trac2 of your ban2 and cash accounts in GnuCash$ you may .ant to start trac2ing your credit cards as .ell. GnuCash pro,ides a special type of account for credit cards$ and this is discussed in the ne0t chapter.

Chapter F Credit Cards

Table of Contents Concepts -etting 'p :ccounts -imple -etup Complete -etup 6ntering Charges 6ntering #ayments #utting /t :ll Together #urchases ;efund /nterest Charge ;econciliation #ayment This chapter .ill sho. you ho. to manage your credit cards using GnuCash.

Concepts
-ince you probably .rite a chec2 or ma2e an electronic payment to the credit card company each month$ you may thin2 of your credit card bill as an e0pense - but it really is not an e0pense. 8hyK : credit card account is a short-term loan - you buy things on that loan account$ and then you e,entually ha,e to pay bac2 the money$ often .ith interest )your finance charge*. The purchases you ma2e .ith that credit card are your e0penses. 3ou ha,e a couple of options .hen entering credit card transactions$ so choose the one that fits your desired le,el of detail. The simplest method is to simply trac2 monthly payments to the credit card company. (rom your ban2 account$ you enter a transfer of money each month to the credit card e0pense account. This .ill sho. you the amount of money you are paying each month to the credit card company$ but it .onFt sho. you any information about your credit card balance or credit card purchases.

: more complete .ay to trac2 your credit card in GnuCash is to enter each purchase and payment as a separate transaction. 'sing the credit card account register$ you enter your receipts throughout the month. 8hen your credit card statement arri,es$ you reconcile the credit card account to the statement$ and you enter your payment as a transfer of money from your chec2ing account to your credit card account. This method gi,es you more information about your balance during the month and points out any discrepancies during reconciliation$ but you .ill ha,e to do more data entry.

'etting %p )ccounts
To begin managing your credit cards in GnuCash$ you should set up a >!iability> top le,el account and under this parent account create credit card type accounts for each credit card you use. /f you are trac2ing only the payments you ma2e to the credit card company$ then all you need is a ban2 account and a credit card account to enter your transactions. The charges you ma2e on your credit card are e0penses$ so you .ill ha,e to setup these accounts under the top-le,el account called >60penses>. /f you decide to 2eep a more detailed records of your purchases$ you .ill need to create e0pense accounts for each 2ind of purchase you ma2e. -ince you .ill also be reconciling the balance to your credit card statements$ you should also enter an opening balance in each credit card account. The easiest .ay to do this is to use your last statement balance as the opening balance.

'imple 'etup
/f you do not .ant to trac2 each e0pense made on the credit card$ you can setup a simple account hierarchy li2e this= -:ssets -1an2 -!iabilities -Credit Card -60penses -Credit Card /n this e0ample$ if you enter your total amount charged per month as a transaction bet.een N!iabilities=Credit CardO and N60penses=Credit CardO. 8hen you ma2e a payment$ you .ould enter a transaction bet.een N:ssets=1an2O and N!iabilities=Credit CardO. The ob,ious limitation of this simple credit card setup is that you cannot see .here your money is going. :ll your credit card e0penses are being entered in the Credit Card e0pense account. This is$ ho.e,er$ ,ery simple to setup and maintain.

Complete 'etup
/f you .ant to trac2 your e0penses more completely$ you should setup multiple e0pense accounts named for the ,arious 2inds of e0penses you ha,e. 6ach charge on your credit card is then entered as a separate transaction bet.een your Credit Card liability account and a specific e0pense account. 1elo. is an e0ample of an account hierarchy for this= -:ssets -1an2 -!iabilities -Credit Card -60penses -(ood

-Car -Clothes -6ntertainment -/nterest --er,ice Clearly$ you should enter specific e0pense accounts .hich fit your spending habits. The only difference .ith this setup as compared to the simple setup is that the e0penses ha,e been subdi,ided by groups. :lso notice that there is an >/nterest> e0pense$ this is used for .hen your credit card charges interest on your monthly unpaid balance. The >-er,ice> e0pense account is used to trac2 ser,ice e0penses associated .ith the credit card$ such as the yearly usage fee if it e0ists. 8ith this setup$ you .ill be able to see .here your money goes e,ery month$ grouped according to the e0pense accounts. The rest of this chapter .ill assume you are using the complete setup.

$ntering Charges
6ntering your charges pro,ides you .ith a more complete picture of your spending habits. Charges on a credit card are trac2ed as a transaction bet.een the credit card liability account and the appropriate e0pense account. 8hen you s.ipe that credit card through the machine at a store$ you are transferring money from your credit card company to that merchant. This transaction increases the amount of money you o.e the credit card company. /f you 2eep trac2 of these types of transactions$ you can reconcile your credit card account .ith your monthly statement$ and you should Guic2ly spot any transactions that loo2 suspicious. -o ho. should you account for charges to your credit cardK 4ne .ay is to manually enter all your receipts$ either throughout the month or all at once. This can be time-consuming$ but it is probably the best .ay to ma2e sure that all of your charges are authoriJed. /f you consistently enter all your receipts$ you can Guic2ly catch any errors or unauthoriJed transactions during your monthly reconciliation. :nother .ay is to import a credit card statement directly into your account. /f your credit card company supports a A/( file format for its statements$ you ha,e the option of directly importing the statement. This type of import is co,ered in the chapter The 1asics$ and it is a con,enient .ay to trac2 your purchases .ithout ha,ing to manually enter all your receipts.

$ntering 5ayments
5ost payments to your credit card bill are entered as transfers from a ban2 account )asset* to the credit card account )liability*. 8hen you pay the monthly bill$ you are .ithdra.ing money from a ban2 account to pay do.n the credit card balance. This transaction decreases both your ban2 account balance and the amount of credit card debt you o.e. 8hen you return a purchase$ you recei,e a refund on your credit card. This is another type of payment in that it decreases the amount of credit card debt you o.e. /f you recorded the original purchase transaction as a transfer from the credit card account to the e0pense$ you no. simply re,erse that transaction= transfer the money bac2 from the e0pense to the credit card account. This transaction decreases both the e0pense account balance and the credit card account balance. (or e0ample$ if you originally recorded a credit card purchase of clothing$ the transaction is a transfer from the credit card account to the clothing e0pense account. /f you then return that clothing for a refund$ you simply transfer the money bac2 from the clothing e0pense account to the credit card account.

,ote
: common mista2e is to enter a refund as income. /t is not income$ but rather a >negati,e e0pense>. That is .hy you must transfer money from the e0pense account to your credit

card .hen you recei,e a refund.

5utting #t )ll Together

&o. that .e ha,e co,ered the basic ideas behind the ,arious transactions you must ma2e to successfully trac2 your credit card in GnuCash$ letFs go through an e0ample. /n this e0ample$ .e .ill ma2e credit card purchases$ ma2e a partial payment to the credit card$ get charged interest on the unpaid balance$ and finally ma2e a complete payoff of the credit card. -tart .ith an account layout similar to that described earlier in this chapter$ sho.n here as it .ould appear in GnuCash. &otice that .e are starting .ith R"0000 in the ban2 and a balance of R"000 on the credit card.

-tarting account structure for trac2ing a credit card in the putting it all together e0ample.

5urchases
!etFs ma2e some purchases. -tart by buying R2E .orth of food from the Greasy -poon Cafe$ R"00 .orth of clothing from (au0 #as (ashions$ R2E .orth of gasoline from #remium Gasoline$ R"2E .orth of groceries and household items from Groceries ; 's )split bet.een RDE in groceries and R40 in household items* and finally$ R70 .orth of household items from Cheap5art. The register .indo. for the credit card liability should loo2 li2e this=

/nitial credit card purchases.

Refund
&o. suppose that on (ebruary 2Hth you return the clothes you bought on (ebruary 3rd from (au0 #as (ashions and they gi,e you credit bac2 on your credit card. 6nter a transaction for the credit card refund for the full R"00 amount. ;emember to use the same transfer account you used for the original purchase$ and enter the amount under the #ayment column. GnuCash .ill automatically complete the name and transfer account for you$ but it .ill also automatically enter the R"00 in the Charge column. 3ou .ill need to reenter the amount in the #ayment column. The transaction loo2s li2e this=

;eturning clothes to (au0 #as (ashions$ refund to credit card.

#nterest Charge
:fter the month of spending$ unfortunately$ the credit card bill arri,es in the mail or you access it on-line through the internet. 3ou ha,e been charged R20 in interest on the last day of (ebruary because of the balance you carried from the pre,ious month. This gets entered into the credit card account as an e0pense.

/nterest charge.

Reconciliation
8hen your credit card bill arri,es you should reconcile your credit card account to this document. This is done using GnuCashFs built-in reconciliation application. <ighlight the credit card account and clic2 on :ctions -S ;econcile.... This reconciliation procedure is described in detail in the >Transactions> chapter$ but .e .ill step through the process here as .ell. (or this e0ample$ letFs assume that the credit card statement is dated (ebruary "st$ .ith a final balance of RIEE. 6nter these ,alues in to the initial ;econcile .indo. as sho.n here.

/nitial account reconciliation .indo.. During the reconciliation process$ you chec2 off each transaction in the account as you confirm that the transaction appears in both your GnuCash account and the credit card statement. (or this e0ample$ as sho.n in the figure belo.$ there is a R300 difference bet.een your GnuCash accounts and the credit card statement.

5ain account reconciliation .indo.$ demonstrating a discrepancy of R300. -ome in,estigation unco,ers that you forgot to record a payment you made to the credit card company for R300 recei,ed on (ebruary Eth$ you must enter this payment transaction from your ban2 account to the credit card. &o. the credit card statement and your GnuCash account are reconciled$ .ith a balance of RIEE.

5ayment
:ssuming you ha,e completed reconciliation of your credit card account$ you need to ma2e a payment to the credit card company. /n this e0ample$ .e o.e RIEE but .ill ma2e a partial payment of R300 again this month. To do so$ enter a transaction from your ban2 account to the credit card account for R300$ .hich should reduce your credit card balance to R7EE. 3our credit card account register should no. appear li2e this=

:ccount register after account reconciliation and payment. 3our main GnuCash main .indo. should no. appear li2e this=

GnuCash main .indo. after account reconciliation and payment.

Chapter G Loans
Table of Contents 1asic Concepts Terminology -etting 'p :ccounts <ouse 5ortgage )<o.-To* Calculations

60ample= 5onthly #ayments 60ample= !ength of !oan :d,anced= Calculation Details 5issing !oan Documentation This chapter e0plains ho. to manage your loans .ith GnuCash.

(asic Concepts
: loan is defined as a financial transaction in .hich someone pays for the use of someone elseFs money. There are many familiar e0amples of loans= credits cards$ auto loans$ house mortgages$ or a business loan.

Terminology
1efore discussing trac2ing loan in GnuCash specifically$ it .ill be helpful to present a glossary of terminology. The terms presented belo. represent some of the basic concepts found concerning loans. /t is a good idea to become familiar .ith these terms$ or at least$ refer bac2 to this list if you encounter an unfamiliar .ord in the later sections.

(morti8ation - the repayment plan .hich .ill insure that a loan is e,entually paid off$ typically utiliJing eGual ,alued monthly payments. These payments are usually split into principal and interest$ .here the amount of principal per payment increases )and interest decreases* as the amortiJation period elapses. !orro/er - the person or company that recei,es the money from a loan. De#ault - .hen a borro.er fails to repay a loan according to the terms agreed upon .ith the lender. De#erment - a temporary delay in the repayment of a loan. Delin2uency - is the term that refers to late payments. Dis*ursement - amount of the loan paid to the borro.er. -ome loans ha,e multiple disbursements$ meaning the borro.er does not recei,e the full amount of the loan at one time. Interest - the e0pense charged by the lender to the borro.er for the use of the money loaned. This is typically e0pressed in terms of a yearly percentage charged on the principal borro.ed$ 2no.n as the (nnual ,ercentage $ate or :#;. 'ender - the company or person .ho lends money to a borro.er. 'oan Fee - a processing fee remo,ed from the principal at the time the borro.er recei,es a loan. ,rincipal - the original amount of the loan$ or the amount of the original loan that is still o.ed. 8hen you ma2e a monthly payment on a loan$ part of the money pays the interest$ and part pays the principal. ,romissory -ote - the legal agreement bet.een the borro.er and lender concerning the loan.

'etting %p )ccounts
8hen a borro.er obtains a loan$ it is usually .ith the intention to ma2e a purchase of something of ,alue. /n fact$ most loans reGuire the borro.er to buy some predetermined asset$ such as a house. This asset is insurance against the borro.er defaulting on the loan. There are$ of course$ e0amples of loans .hich do not necessarily ha,e an associated high ,alue asset$ such as educational loans. (or the account structure presented here$ .e .ill assume the loan .as used to purchase a compensating asset. : loan is a liability$ the interest you accrue on the loan is an on-going e0pense$ and any administrati,e fees you may ha,e to pay .ould be another e0pense. The thing purchased .ith the money from a loan is

an asset. 8ith these parameters$ .e can no. present a basic loan account structure= 1asic !oan :ccount -tructure -:sset -1an2 :ccount -:sset #urchased -!iability -!oan -60penses -!oan /nterest -!oan :dmin (ees GnuCash has a number of predefined loan account hierarchies a,ailable$ including Car !oans and <ome 5ortgage !oans. To access these predefined account structures$ clic2 on (ile -S &e. (ile and select the loan types in .hich you are interested.

House 3ortgage 8Ho"6To:

: house mortgage can be setup using the account structure present in the pre,ious section. :s an e0ample$ assume you ha,e R702 in you ban2 account$ and you buy a R"E02 house. The mortgage is charging 7[ :#;$ and has administrati,e fees )closing costs$ etc* of 3[. 3ou decide to put RE02 do.n$ and thus .ill need to borro. R"032$ .hich .ill gi,e you R"00 after the closing costs are paid )3[ of R"002*. 3ou accounts before borro.ing the money=

:ccounts 1efore ;ecei,ing !oan The purchase of the house is recorded .ith a split transaction in the :sset=<ouse account$ .ith RE02 coming from the ban2 )/6= your do.n payment*$ and R"002 coming from the 5ortgage. 3ou can place the R32 closing costs in the same split. Table G 1 (uying a House 'plit Transaction :ccount :ssets=<ouse /ncrease Decrease R"E0$000

:ssets=1an2 !iabilities=5ortgage

RE0$000 R"03$000

60penses=5ortgage :dm R3000 (ees The split .ill loo2 li2e this in the :ssets=<ouse :ccount=

5ortgage -plit Transaction 8hich .ill gi,e account totals li2e this=

5ortgage :ccount

Calculations
Determining loan amortiJation schedules$ periodic payment amounts$ total payment ,alue$ or interest rates can be some.hat comple0. To help facilitate these 2inds of calculations$ GnuCash has a built-in (inancial Calculator. To access the calculator$ go to Tools -S (inancial Calculator.

The GnuCash (inancial Calculator. The (inancial Calculator can be used to calculate any one of the parameters= #ayment #eriods$ /nterest ;ate$ #resent +alue$ #eriodic #ayment$ or (uture +alue gi,en that the other 4 ha,e been defined. 3ou .ill also need to specify the compounding and payment methods.

,ayment ,eriods - the number of payment periods. Interest $ate - the nominal interest rate of the loan$ ie= the yearly interest rate. ,resent 9alue - the present ,alue of the loan$ ie= current amount o.ed on the loan. ,eriodic ,ayment - the amount to pay per period. Future 9alue - the future ,alue of the loan$ ie= the amount o.ed after all payment periods are o,er. "ompounding - t.o interest compounding methods e0ist$ discrete or continuous. (or discrete compounding select the compounding freGuency from the popup menu .ith a range from yearly to daily. ,ayments - the popup menu allo.s you to select the payment freGuency .ith a range from yearly to daily. 3ou can also select .hether your payments occur at the beginning or end of the period. #ayments made at the beginning of the payment period ha,e interest applied to the payment as .ell as any pre,ious money paid or money still o.ed.

$9ampleH 3onthly 5ayments

8hat is your monthly payment on a R"00000 30 year loan at a fi0ed rate of 4[ compounded monthlyK This scenario is sho.n in the e0ample image abo,e. To perform this calculation$ set #ayment #eriods to 370 )"2 months 0 30 years*$ /nterest ;ate to 4$ #resent +alue to "00000$ lea,e #eriodic #ayment empty and set (uture +alue to 0 )you do not .ant to o.e anything at the end of the loan*. Compounding is 5onthly$ #ayments are 5onthly$ assume 6nd of #eriod #ayments$ and Discrete Compounding. &o.$ clic2 on the Calculate button ne0t to the #eriodic #ayment area. 3ou should see -4H3.30. :ns.er= 3ou must ma2e monthly payments of 4H3.30.

$9ampleH Length of Loan

<o. long .ill you be paying bac2 a R20000 loan at "0[ fi0ed rate interest compounded monthly if you

pay RE00 per monthK To perform this calculation$ lea,e #ayment #eriods empty$ set /nterest ;ate to "0$ #resent +alue to 20000$ #eriodic #ayment is -E00$ and set (uture +alue is 0 )you do not .ant to o.e anything at the end of the loan*. Compounding is 5onthly$ #ayments are 5onthly$ assume 6nd of #eriod #ayments$ and Discrete Compounding. &o.$ clic2 on the Calculate button ne0t to the #ayment #eriods area$ you should calculate 4D. :ns.er= 3ou .ill pay off the loan in 4 years )4D months*.

)dvancedH Calculation 1etails

/n order to discuss the mathematical formulas used by the (inancial Calculator$ .e first must define some ,ariables. n UU number of payment periods [i UU nominal interest rate$ &:;$ charged #+ UU #resent +alue #5T UU #eriodic #ayment (+ UU (uture +alue C( UU Compounding (reGuency per year #( UU #ayment (reGuency per year &ormal ,alues for C( and #( are= " UU annual 2 UU semi-annual 3 UU tri-annual 4 UU Guaterly 7 UU bi-monthly "2 UU monthly 24 UU semi-monthly 27 UU bi-.ee2ly E2 UU .ee2ly 370 UU daily 37E UU daily Converting bet"een nominal and effective interest rate 8hen a solution for n$ #+$ #5T or (+ is reGuired$ the nominal interest rate )i* must first be con,erted to the effecti,e interest rate per payment period )ieff*. This rate$ ieff$ is then used to compute the selected ,ariable. 8hen a solution for i is reGuired$ the computation produces the effecti,e interest rate )ieff*. Thus$ .e need functions .hich con,ert from i to ieff$ and from ieff to i. To con,ert from i to ieff$ the follo.ing e0pressions are used= Discrete /nterest= ie## 3 (: 4 i+"F);("F+,F) ) : Continuous /nterest= ie## 3 e;(i+,F) ) : 3 exp(i+,F) ) : To con,ert from ieff to i$ the follo.ing e0pressions are used= Discrete /nterst= i 3 "F<=(:4ie##);(,F+"F) ) :> Continuous /nterest= i 3 ln=(:4ie##);,F>

,ote
&4T6= in the eGuations belo. for the financial transaction$ all interest rates are the effecti,e interest rate$ ieff. (or the sa2e of bre,ity$ the symbol .ill be shortened to 9ust FiF.

The basic financial e0uation 4ne eGuation fundamentally lin2s all the E ,ariables. This is 2no.n as the fundamental financial eGuation= ,9<(: 4 i);n 4 ,M&<(: 4 iX)<=(:4i);n ) :>+i 4 F9 3 ? 8here= @ U 0 for end of period payments$ and @ U " for beginning of period payments (rom this eGuation$ functions .hich sol,e for the indi,idual ,ariables can be deri,ed. (or a detailed e0planation of the deri,ation of this eGuation$ see the comments in the file src%calculation%fin.c from the GnuCash source code. The :$ 1$ and C ,ariables are defined first$ to ma2e the later eGuations simpler to read. ( 3 (: 4 i);n ) : ! 3 (: 4 iX)+i " 3 ,M&<! n 3 ln=(" ) F9)+(" 4 ,9)>+ln((: 4 i) ,9 3 )=F9 4 (<">+(( 4 :) ,M& 3 )=F9 4 ,9<(( 4 :)>+=(<!> F9 3 )=,9 4 (<(,9 4 ")> The solution for interest is bro2en into t.o cases. The simple case for .hen #5T UU 0 gi,es the solution= i 3 =F9+,9>;(:+n) ) : The case .here #5T LU 0 is fairly comple0 and .ill not be presented here. ;ather than in,ol,ing an e0actly sol,able function$ determining the interest rate .hen #5T LU0 in,ol,es an iterati,e process. #lease see the src%calculation%fin.c source file for a detailed e0planation. $9ampleH 3onthly 5ayments !etFs recalculate the e0amples sho.n abo,e$ this time using the mathematical formulas rather than the (inancial Calculator. 8hat is your monthly payment on a R"00000 30 year loan at a fi0ed rate of 4[ compounded monthlyK (irst$ letFs define the ,ariables= n U )30\"2* U 370$ #+ U "00000$ #5T U un2no.n$ (+ U 0$ i U 4$ C( U #+ U "2$ @ U 0 )end of payment periods*. The second step is to con,ert the nominal interest rate )i* to the effecti,e interest rate )ieff*. -ince the interest rate is compounded monthly$ it is discrete$ and .e use= ieff U )" Q i%C(*])C(%#(* - "$ .hich gi,es ieff U )" Q 4%"2*])"2%"2* - "$ thus ieff U "%3 U 0.3333333. &o. .e can calculate : and 1. : U )" Q i*]n - " U )" Q "%3*]370 - " U I.E04D4D0"0]44. 1 U )" Q i@*%i U )" Q 0.33333\0*%0.33333 U 3. 8ith : and 1$ .e can calculate #5T. #5T U -V(+ Q #+\): Q "*W%V:\1W U -V0 Q "00000\)I.E04D4D0"0]44 Q "*W % VI.E04D4D0"0]44 \ 3W U -I.E04D4D0"0]4I % 2.DE"4E40"0]4E U -33333.3.

3issing Loan 1ocumentation

-:utomobile !oan )<o.-To* -6ntering a #ayment -chedule

-5onthly #ayments )<o.-To* -(inal #ayment )<o.-To* --elling a <ouse or :utomobile )<o.-To* -;econciling .ith the !oan -tatements )<o.-To* -#utting /t :ll Together

Chapter - #nvestments
Table of Contents 1asic Concepts Terminology Types of /n,estments -etting 'p :ccounts #redefined :ccounts Custom :ccounts 60ample /nterest 1earing :ccounts :ccount -etup 60ample -etup -toc2 #ortfolio -etup #ree0isting -toc2s 60ample -toc2 :ccount 1uying &e. /n,estments -etting -toc2 #rice /nitial #rice 6ditor -etup -etting -toc2 #rice 5anually -etting -toc2 #rice :utomatically Displaying -toc2 +alue 5a2ing -toc2 +alue ;eports Di,idends -elling -toc2s 60ample To-do This chapter e0plains ho. to manage your in,estments .ith GnuCash. 5ost people ha,e an in,estment plan$ .hether its 9ust putting money into a CD account$ in,esting through a company sponsored plan at your .or2place or buying and selling stoc2s and bonds through a bro2erage. GnuCash gi,es you tools to help you manage these in,estments such as the ,rice Editor .hich allo.s you to record changes in the prices of stoc2s you o.n.

(asic Concepts
:n in,estment is something that you purchase in the hopes of generating income$ or that you hope to sell in the future for more than you paid. 'sing this simple definition$ many things could be considered in,estments= the house you li,e in$ a ,aluable painting$ stoc2s in publicly traded companies$ your sa,ings account at the ban2$ or a certificate of deposit. These many types of in,estments .ill be discussed in this chapter in terms of ho. to trac2 them using GnuCash.

Terminology
1efore discussing in,estments specifically$ it .ill be helpful to present a glossary of in,estment

terminology. The terms presented belo. represent some of the basic concepts of in,esting. /t is a good idea to become familiar .ith these terms$ or at least$ refer bac2 to this list if you encounter an unfamiliar .ord in the later sections.

"apital gains is the difference bet.een the purchase and selling prices of an in,estment. /f the selling price is lo.er than the purchase price$ this is called a capital loss. :lso 2no.n as reali8ed gain+loss. "ommission is the fee you pay to a bro2er to buy or sell securities. "ommon stock is a security that represents a certain fractional o.nership of a company. This is .hat you buy .hen you >buy stoc2> in a company on the open mar2et. This is also sometimes 2no.n as capital stock. "ompounding is the concept that the rein,ested interest can later earn interest of its o.n )interest on interest*. This is often referred to as compound interest. Di.idends are cash payments a company ma2es to shareholders. The amount of this payment is usually determined as some amount of the profits the company. &ote that not all common stoc2s gi,e di,idends. E2uities are in,estments in .hich the in,estor becomes part )or .hole* o.ner in something. This includes common stoc2 in a company$ or real estate. Interest is .hat a borro.er pays a lender for the use of their money. &ormally$ this is e0pressed in terms of a percentage of the principal per year. (or e0ample$ a sa,ings account .ith "[ interest )you are the lender$ the ban2 is the borro.er* .ill pay you R" for e,ery R"00 you 2eep there per year. 'i2uidity is a measure of ho. easily con,ertible an in,estment is to cash. 5oney in a sa,ings account is ,ery liGuid$ .hile money in,ested in a house has lo. liGuidity because it ta2es time to sell a house. ,rincipal is the original amount of money in,ested or borro.ed. $eali8ed .s Unreali8ed 0ain+'oss$ unrealiJed gain or loss occurs .hen youF,e got a change in price of an asset. 3ou realiJe the gain%loss .hen you actually sell the asset. -ee also capital gain+loss. $eturn is the total income plus capital gains or losses of an in,estment. -ee yield. $isk is the probability that the return on in,estment is different from .hat .as e0pected. /n,estments are often grouped on a scale from lo. ris2 )sa,ings account$ go,ernment bonds* to high ris2 )common stoc2$ 9un2 bonds*. :s a general rule of thumb$ the higher the ris2 the higher the possible return. %hareholder is a person .ho holds common stoc2 in a company. %tock split occurs .hen a company offers to issue some additional multiple of shares for each e0isting stoc2. (or e0ample$ a >2 for "> stoc2 split means that if you o.n "00 shares of a stoc2$ you .ill recei,e an additional "00 at no cost to you. The unit price of the share .ill be ad9usted so there is no net change in the ,alue$ so in this e0ample the price per share .ill be hal,ed. 9aluation is the process of determining the sell ,alue of an in,estment. 1ield is a measure of the amount of money you earn from an in,estment )/6= ho. much income you recei,e from the in,estment*. Typically this is reported as a percentage of the principal amount. 3ield does not include capital gains or loses )see ;eturn*. 6g= : stoc2 sells for R"00 and gi,es R2 in di,idends per year has a yield of 2[.

Types of #nvestments
1elo. is presented some of the broad types of in,estments a,ailable$ and e0amples of each type.

Interest)*earing account or instrument

This type of in,estment usually allo.s you immediate access to your money$ and .ill typically pay you interest e,ery month based on the amount of money you ha,e sa,ed. 60amples are ban2 sa,ings accounts )and some interest bearing chec2ing accounts* and cash accounts at your bro2erage. This is a ,ery lo. ris2 in,estment$ in the '- these accounts are often insured against loss. -ometimes an interest bearing in,estment is time)locked. This type of in,estment reGuires you to commit your money to be in,ested for a gi,en period of time for .hich you recei,e a set rate of return. 'sually$ the longer you commit the higher the interest rates. /f you .ithdra. your money before the maturity date$ you .ill usually ha,e to pay an early .ithdra.al penalty. This is a lo. ris2 in,estment. 60amples are certificates of deposit or some go,ernment bonds.

%tocks and Mutual Funds This is an in,estment you ma2e in a company$ in .hich you effecti,ely become a part o.ner. There is usually no time loc2 on publicly traded stoc2$ ho.e,er there may be changes in the ta0 rates you pay on capital gains depending on ho. long you hold the stoc2. Thus$ stoc2s are typically Guite liGuid$ you can access your money relati,ely Guic2ly. This in,estment is high ris2$ as you ha,e no guarantee .hat the future price of a stoc2 could be. : mutual fund is a group in,estment mechanism in .hich you can buy into many stoc2s simultaneously. (or e0ample$ a >-M# E00 inde0 fund> is a fund .hich purchases all E00 stoc2s listed in the -tandard and #oorFs inde0. 8hen you buy a share of this fund$ you are really buying a small amount of each of the E00 stoc2s contained .ithin the fund. 5utual funds are treated e0actly li2e a single stoc2$ both for ta0 purposes and in accounting.

Fixed (ssets :n asset that increase in ,alue o,er time are another form of in,estment. 60amples include a house$ a plot of land$ or a ,aluable painting. This type of in,estment is ,ery difficult to determine the ,alue of until you sell it. The ta0 implications of selling these items is ,aried$ depending on the item. (or e0ample$ you may ha,e ta0 relief from selling a house if it is your primary residence$ but may .ould not recei,e this ta0 brea2 on an e0pensi,e painting. (i0ed asset in,estments are discussed in the chapter on >Depreciation and Capital Gains>. Typically$ there is not much to do in terms of accounting for fi0ed asset in,estments e0cept record the buying and selling transactions.

'etting %p )ccounts
To setup in,estment accounts in GnuCash you can either use the predefined in,estment account hierarchy or create your o.n. The minimum you need to do to trac2 in,estments is to setup an asset account for each type of in,estment you o.n. <o.e,er$ as .e ha,e seen in pre,ious chapters$ it is usually more logical to create a structured account hierarchy$ grouping related in,estments together. (or e0ample$ you may .ant to group all your publicly traded stoc2s under a parent account named after the bro2erage firm you used to buy the stoc2s. ;egardless of ho. you setup your account hierarchy$ remember that you can al.ays mo,e accounts around later ).ithout losing the .or2 youF,e put into them*$ so your initial account hierarchy does not ha,e to be perfect.

5redefined )ccounts
To use the predefined in,estment account hierarchy$ you must create a ne. GnuCash file. This .ill run the &e. :ccount <ierarchy -etup druid. :fter choosing the default currency to use$ you .ill be as2ed to Choose accounts to create. :t this point$ choose the >/n,estment :ccounts> option )along .ith any others you are interested in*. This .ill create an account hierarchy as sho.n belo.. - :ssets

- /n,estments - 1ro2erage :ccounts - 5utual (unds - 5ar2et /nde0 - -toc2 - 1ond - /ncome - /nterest /ncome - 1ond /nterest - Di,idend /ncome - 60penses - Commissions 3ou .ill probably at least .ant to add a !ank account to the :ssets and probably an E2uity7%tarting 9alues account$ as .e ha,e done in pre,ious chapters.

Custom )ccounts $9ample

3ou can also manually setup your o.n in,estment account hierarchy. The follo.ing is a some.hat more complicated e0ample of setting up GnuCash to trac2 your in,estments$ .hich has the ad,antage that it groups each different in,estment under the bro2erage that deals .ith the in,estments. This .ay it is easier to compare the statements you get from your bro2erage .ith the accounts you ha,e in GnuCash and spot .here GnuCash differs from the statement. - :ssets - /n,estments - 1ro2erage :ccounts - /\Trade - -toc2s - :C56 Corp - 5oney 5ar2et (unds - /\Trade 5unicipal (und - Cash - 5y -toc2bro2er - 5oney 5ar2et (unds - :cti,e :ssets (und - Go,ernment -ecurities - Treas 1ond 000 - Treas &ote yyy - 5utual (unds - (und : - (und 1 - Cash - /ncome - /n,estments - 1ro2erage :ccounts - Capital Gains - /\Trade - 5y -toc2bro2er - Di,idends - /\Trade - Ta0able - &on-ta0able - 5y -toc2bro2er - Ta0able

- &on-ta0able - /nterest /ncome - /\Trade - Ta0able - &on-ta0able - 5y -toc2bro2er - Ta0able - &on-ta0able - 60penses - /n,estment 60penses - Commissions - /\Trade - 5y -toc2bro2er - 5anagement (ees - /\Trade - 5y -toc2bro2er There really is no uniGue .ay to set up your in,estment account hierarchy. #lay around$ try different layouts until you find something .hich di,ides your in,estment accounts into logical groups .hich ma2e sense to you.

#nterest (earing )ccounts

/n,estments .hich ha,e a fi0ed or ,ariable rate of interest are one of the simplest and most common form of in,estments a,ailable. /nterest bearing in,estments include your ban2 account$ a certificate of deposit$ or any other 2ind of in,estment in .hich you recei,e interest from the principal. This section .ill describe ho. to handle these 2inds of in,estments in GnuCash.

)ccount 'etup
8hen you purchase the interest bearing in,estment$ you must create an asset account to record the purchase of the in,estment$ an income account to record earnings from interest$ and an e0pense account to record ban2 charges. 1elo. is an account layout e0ample$ in .hich you ha,e an interest bearing sa,ings account and a certificate of deposit at your ban2. -:sset -1an2 -CD --a,ings -60penses -1an2 -Charges -/ncome -1an2 -/nterest :s usual$ this account hierarchy is simply presented as an e0ample$ you should create your accounts in a form .hich best matches your actual situation.

$9ample
&o. letFs populate these accounts .ith real numbers. !etFs assume that you start .ith R"0000 in your ban2 account$ .hich pays "[ interest and you buy a RE000 certificate of deposit .ith a " year maturity

date and a 2[ yield. Clearly$ it is much better to 2eep your money in the CD than in the sa,ings account. :fter the initial purchase$ your accounts should loo2 something li2e this=

This image the creation of the interest in,estment account &o.$ during the course of the ne0t year$ you recei,e monthly ban2 statements .hich describe the acti,ity of your account. /n our fictional e0ample$ .e do nothing .ith the money at this ban2$ so the only acti,ity is income from interest and ban2 charges. The monthly ban2 charges are R2. :fter "2 months$ the register .indo. for the CD should loo2 li2e this=

This image the creation of the interest in,estment account :nd this is the main GnuCash .indo.=

This image the creation of the interest in,estment account (rom the abo,e image of the main GnuCash account .indo. you see a nice summary of .hat happened to these in,estments o,er the 7 months. 8hile the yield on the CD is double that of the sa,ings account$ the return on the CD .as RE0.2" ,ersus R"3.03 for the sa,ings account$ or almost 4 times more. 8hyK 1ecause of the pes2y R2 ban2 charges that hit the sa,ings account ).hich counted for R"2 o,er 7 months*. :fter this 7 month period$ the CD has reached maturity .hich means you may sell it .ith no early .ithdra.al penalty. To do so$ simply transfer the RE0E0.2" from the CD account into the sa,ings account.

'etup 'tock 5ortfolio

&o. that you ha,e build an account hierarchy in the pre,ious section$ this section .ill sho. you ho. to populate the accounts .ith your stoc2 portfolio. During this initial setup of your portfolio$ you may ha,e stoc2s purchased from before you started using GnuCash. (or these stoc2s$ follo. the instructions in the %etup 1our ,re)existing %tocks section belo.. /f your ha,e 9ust purchased your stoc2s$ then use the !uying -e/ %tocks section.

'etup 5ree9isting 'tocks

This section .ill sho. you ho. to add stoc2s to GnuCash assuming that you purchased these stoc2s from before you started using GnuCash. /n this section$ .e .ill assume you are using the basic predefined account setup introduced in the pre,ious section$ but the principles can be applied to any account hierarchy. 3ou should ha,e .ithin the top le,el :sset account$ a fe. le,els do.n$ an account entitled -toc2. 4pen the account tree to this le,el by clic2ing on the Q )plus* signs ne0t to the account names until the tree to fully opened. 3ou .ill need to create a sub-account )of type stock* under the -toc2 account for e,ery stoc2 you o.n. 6,ery stoc2 is a separate account. The naming of these stoc2 accounts is usually done using the stoc2 tic2er abbre,iation. -o$ for e0ample$ you could name your accounts (M@- and I!M for your :maJon and /15 stoc2s respecti,ely. 1elo. is a schematic model of the layout )only sho.ing the :ssets sub-accounts*. - :ssets - /n,estments - 1ro2erage :ccounts - 5utual (unds

- 5ar2et /nde0 - -toc2 - :5B& - /15 - 1ond

$9ample 'tock )ccount

:s an e0ample$ letFs assume that you currently o.n "00 shares of :maJon stoc2. (irst$ create the stoc2 account :5B& by selecting the -toc2 account and clic2 on the menu (ile -S &e. :ccount. The &e. :ccount dialog .ill appear$ follo. the step belo. to setup your ne. stoc2 account. ". -ame the (ccount - 'sually$ use the stoc2 tic2er abbre,iation$ /6= N:5B&O 2. "reate the -e/ "ommodity - To use a ne. stoc2$ you must create the stoc2 as a ne. commodity a. %elect "ommodity - Clic2 on the N-electO button ne0t to the Commodity line. 8e must change the commodity from the default )your default currency* to this specific stoc2. This .ill bring up the N-elect currency%securityO dialog. b. "ommodity &ype - Change the type from C';;6&C3 to )in this e0ample* &:-D:A. c. "reate the "ommodity - Clic2 on the &e.... button and enter the appropriate information for this stoc2. The (ull name= is N:maJon.com /ncO$ the -ymbol%abbre,iation= is N:5B&O$ the Type= should already be N&:-D:AO$ the C'-/# or other code is .here you can enter some other coding number or te0t )lea,e it blan2 in this e0ample*$ and finally the (raction traded should be ad9usted to the smallest fraction of this commodity .hich can be traded$ usually "%"00 or "%"0000. 1elo. is .hat this .indo. should loo2 li2e .hen finished=

&e. -ecurity 8indo. d. %a.e "ommodity - Clic2 on the 4? button to sa,e this ne. commodity 3. %elect the "ommodity - you should no. see the ne.ly create commodity a,ailable in the pull do.n menu for Currency%security. -elect it )it is probably already selected* and clic2 on 4?. 4. Finished - 3ou should no. ha,e been automatically returned to the &e. :ccount dialog$ .ith the Commodity= line set to N:5B& ):maJon.com /nc*O. Clic2 on 4? to sa,e this ne. stoc2 account. 3ou ha,e no. create the :maJon stoc2 account$ your main account should loo2 something li2e this )notice that there are a fe. e0tra account here$ a ban2 account$ and an eGuity account*=

This image the creation of the first stoc2 account 4pen the account register .indo. for this :5B& stoc2 account )double clic2 on it*. <ere you see the #ortfolio ,ie.. This gi,es you an o,er,ie. of your stoc2 portfolio including the number of shares bought and sold. 4b,iously$ .e ha,e not bought or sold any stoc2s yet$ so the #ortfolio ,ie. should not contain any transactions. To register the initial "00 shares of this stoc2 that you purchased pre,iously$ on the first transaction line$ enter the date of the purchase )eg= an. " 200"*$ a description )eg= /nitial #urchase*$ transfer from E2uity7 Opening !alances$ -hares )eg= "00*$ and #rice )eg= R20*. 3ou do not need to fill in the 1uy column$ as it .ill be calculated for you. 3our :5B& #ortfolio ,ie. should no. appear li2e this=

This image the creation of the first stoc2 account &otice that the 1alance is in the units of the commodity ):5B& shares* not in currency units. Thus$ the balance is "00 ):5B& units* rather than R2000. This is ho. it should be.

(uying ,e" #nvestments

The only difference bet.een setting up a ne. in,estment purchase ,ersus the setup for pree0isting stoc2s as described in the pre,ious section is that instead of transferring the money used to purchase the stoc2 from the 6Guity=-tarting 1alances account$ you use your :sset=1an2 account.

'etting 'tock 5rice

The ,alue of a commodity$ such as a stoc2$ must be e0plicitly set. The stoc2 accounts trac2 the Guantity of stoc2s you o.n$ but the ,alue of the stoc2 is stored in the ,rice Editor. The ,alues set in the #rice

6ditor can be updated manually or automatically.

#nitial 5rice $ditor 'etup

To use the #rice 6ditor to trac2 a stoc2 ,alue$ you must initially insert the stoc2. To do so$ open the #rice 6ditor )Tools -S #rice 6ditor* and clic2 on :dd button. -elect the appropriate Commodity you .ant to insert into the #rice 6ditor. :t this point$ you can input the price of the commodity manually. There are E fields in the &e. Commodity .indo.=

Commodity - the name of the commodity$ must be chosen from the -elect... list Currency - the currency the in .hich the #rice is e0pressed. Date - date that the price is ,alid Type - one of= 1id )the mar2et buying price*$ :s2 )the mar2et selling price*$ !ast )the last transaction price*$ &et :sset +alue )mutual fund price per share*$ or 'n2no.n. -toc2s and currencies .ill usually gi,e their Guotes as one of bid$ as2 or last. 5utual funds are often gi,en as net asset ,alue. (or other commodities$ simply choose >'n2no.n>. This option is for informational purposes only$ it is not used by GnuCash. #rice - the price of one unit of this commodity.

:dding the :5B& commodity to the price editor$ .ith an initial ,alue of R40.E0 per share. Clic2 4? .hen finished. 4nce you ha,e performed this initial placement of the commodity into the #rice 6ditor$ you .ill not ha,e to do it again$ e,en if you use the same commodity in another account.

The main price editor .indo.$ sho.ing the list of all 2no.n commodities.

'etting 'tock 5rice 3anually

/f the ,alue of the commodity )stoc2* changes$ you can ad9ust the ,alue by entering the #rice 6ditor$ selecting the commodity$ clic2ing on edit and entering the ne. price.

'etting 'tock 5rice )utomatically

/f you ha,e many commodities$ you .ill tire of ha,ing to update their prices constantly. GnuCash has the ability to automatically determine the most recent price for your commodities using the /nternet. This is accomplished through the #erl module (inance==Auote$ .hich must be installed in order to acti,ate this feature. To determine if the #erl module (inance==Auote is already installed on your system$ type Nperldoc (inance==AuoteO in a terminal .indo. and loo2 to see if there is any documentation a,ailable. /f you see the documentation$ then the module is installed$ if you do not see the documentation$ then it has not been installed. #nstalling FinanceHH7uote To install (inance==Auote begin by first closing any GnuCash applications you ha,e running. -econd$ open a root shell and run the command Nupdate-finance-GuoteO ).ithout the Guotation mar2s*. This .ill launch a #erl C#:& update session that .ill go out onto the /nternet and install the (inance==Auote module on your system. The update-finance-Guote program is interacti,e$ ho.e,er$ .ith most systems you should be able to ans.er >no> to the first Guestion= N:re you ready for manual configurationK VyesWO and the update .ill continue automatically from that point. :fter installation is complete$ you should run the >dump-finance-Guote> test program distributed .ith GnuCash to test if (inance==Auote is installed and .or2ing properly.

,ote
/f you feel uncomfortable about performing any of these steps$ please either email the GnuCash-user mailing list )gnucash-user^gnucash.org* for help or come to the GnuCash /;C channel on irc.gnome.org. 3ou can also lea,e out this step and manually update your stoc2 prices. Configuring FinanceHH7uote 8ith (inance==Auote installed and functioning correctly$ you must configure your GnuCash stoc2 accounts to use this feature to obtain updated price information automatically. (or stoc2 accounts that ha,e already been setup$ edit the account and select the Get 4nline Auotes bo0. 3ou should no. be able to modify the popup menus The source for price Guotes and The timeJone for these Guotes. 8hen finished editing the stoc2 account$ return to the price editor and clic2 on the Get Auotes button to update your stoc2 prices on the internet. The command >gnucash --add-price-Guotes R<456%gnucash.0ac> can be used to fetch the current prices of your stoc2s. This can be automated by creating a crontab entry. (or e0ample$ to update your file e,ery (riday e,ening after the 8all -treet mar2ets close )modify the time accordingly for your time Jone*$ you could add the follo.ing to your personal crontab= 0 "7 \ \ E gnucash --add-price-Guotes R<456%gnucash.0ac S %de,%null 2SM"

1isplaying 'tock Ialue

The main account .indo. .ill by default only sho.s the Guantity of each commodity that you o.n$ under the column heading Total. /n the case of stoc2s$ this commodity is the number of shares. 4ften$

ho.e,er$ you .ill .ant to see the ,alue of your stoc2s e0pressed in terms of some monetary unit. This is easily accomplished by entering the main .indo. account options$ by clic2ing on the tool bar 4ptions button$ and select to display the account field NTotal in ;eport CurrencyO. 3ou .ill see a ne. column in the main .indo. entitled Total );eport* that .ill e0press the ,alue of all commodities in the report currency.

+ie.ing the ,alue of a stoc2 commodity in the main .indo. using the Total in ;eport Currency option.

3aking 'tock Ialue Reports

Gnucash offers three alternati,es to determine stoc2 prices in reports=

Determining the ,alue of a stoc2 commodity in a report by setting the #rice -ource option.

8eighted :,erage - gi,es you a graph of the .eighted price of all transactions. /t .ill not ta2e into account prices defined in the price editor. 5ost recent - displays the changing ,alue of your stoc2s based solely on the most recent price

a,ailable from the price editor. The price figuring in your stoc2 transactions is not considered.

&earest in time - the graph is e0clusi,ely based on the prices a,ailable from the price editor. The ,alue of your stoc2 at each step and point in time is calculated based on the nearest a,ailable price in the price editor.

Trac2ing .hat ,alue your stoc2s .ouldF,e had on the stoc2 e0changes.

1ividends
-ome companies or mutual funds pay periodic di,idends to shareholders. Di,idends are typically gi,en in one of t.o .ays$ either they are automatically rein,ested into the commodity or they are gi,en as cash. 5utual funds are often setup to automatically rein,est the di,idend$ .hile common stoc2 di,idends usually pay cash. /f you recei,e the di,idend in the form of an automatic rein,estment$ the transaction to account for this should be handled .ithin the stoc2 or mutual fund account as income from >/ncome=Di,idend> for the appropriate number of rein,ested shares. /f the di,idend is presented as cash$ you should record the transaction directly in the ban2 account that recei,ed the money$ as income from >/ncome==Di,idends> .ith a note mentioning from .hich commodity it .as deri,ed. There is no simple .ay to sho. this transaction from .ithin the stoc2 or mutual fund account itself.

,ote
/f you .ant to trac2 di,idends on a per-stoc2 basis$ you .ould need to create an /ncome=Di,idends=-T4C?-3514! account for each stoc2 you o.n that pays di,idends.

'elling 'tocks
6ntering an in,estment you are selling is done in the same .ay as buying one e0cept the total cost of the transaction is entered in the %ell column and the %hares column is entered as a negati,e amount. The proceeds from the sale should be transferred from the stoc2 account to your ban2 account. The proper recording of the stoc2 sale \must\ be done using a split transaction. /n the split transaction$ you must account for the profit )or loss* as coming from an /ncome=Capital Gains account )or 60pense=Capital !oss*. To balance this income$ you .ill need to enter the stoc2 asset t.ice in the split. 4nce to record the actual sale )using the correct number of shares and correct price per share* and once to balance the income profit )setting the number of shares to 0 and price per share to 0*. /n the split transaction scheme presented belo.$ the symbol &'5_-<:;6- is the number of shares you are selling$ -6!!_#;/C6 is the price for .hich you sold the shares$ G;4--_T4T:! is the total price for .hich you sold shares$ eGual to &'5_-<:;6-\-6!!_#;/C6. #;4(/T is the amount of money you made on the sale. C455/--/4&- are the bro2erage commissions. &6T_-:!6 is the net amount of money recei,ed from the sale$ eGual to G;4--_T4T:! - C455/--/4&-. Table - 1 'elling 'tock 'plit Transaction 'cheme (ccount :sset=1an2 :sset=-toc2=-3514 -&'5_-<:;6- -6!!_#;/C6 ! :sset=-toc2=-3514 ! /ncome=Capital Gains #;4(/T #;4(/T -um*er o# %hares %hare ,rice &otal !uy &6T_-:!6 G;4--_-:!6 &otal %ell

60penses=Commission C455/--/4& s /f you .ill be recording the sale of the stoc2 as a capital gain )or loss*$ please see the chapter >Depreciation and Capital Gains> for more information on this topic.

$9ample
:s an e0ample$ assume you bought "00 shares of a stoc2 for R20 per share$ then later sell them all for R30 per share. /n the split transaction scheme abo,e$ #;/C61'3 is R20 )the original buying price*$ &'5-<:;6- is "00$ T4T:!1'3 is R2000 )the original buying price*$ T4T:!#;4(/T is R"000$ and finally T4T:!-:!6 is R3000.

:n e0ample of selling stoc2. 3ou bought "00 shares of :5B& for R20 per share$ and sold for R30.

To6do
These are the remaining documentation sections that originally appeared in the ".D.4 documentation .hich reGuire being .ritten up.

;ecording -toc2 -plits and 5ergers )<o.-To* ;ecording 6mployee -toc2 #lans )Discussion* -toc2 4ptions )<o.-To* ;econciling .ith the 1ro2erage -tatement )<o.-To*

Chapter J Capital Gains

Table of Contents 1asic Concepts 6stimating +aluation :ccount -etup 60ample 'nrealiJed Gains -elling Caution about +aluation Ta0ation This chapter .ill present some of the techniGues used to 2eep trac2 of the unrealiJed and realiJed gains and losses$ better 2no.n as capital gains and losses.

(asic Concepts
This chapter .ill present some of the techniGues used to 2eep trac2 of the unrealiJed and realiJed gains and losses$ better 2no.n as capital gains and losses. Certain resellable assets can change ,alue o,er time$ such as stoc2s$ bonds$ houses$ or cars. -ome assets )eg= a stoc2* could increase in ,alue$ some )eg= a car* could decrease in ,alue. /t is important to be able to trac2 some of these time-dependent asset ,aluations$ this chapter .ill sho. you ho.. #robably e,erything you o.n .ill increase or decrease in ,alue o,er time. -o$ the Guestion is for .hich of these assets should you trac2 this changing ,alueK The simple ans.er is that you only need to trac2 this for items .hich could be sold for cash in the future or .hich relate to ta0ation. Consumable and disposable items )eg= food$ gas for your car$ or printer paper* are ob,iously not in,ol,ed. Thus$ e,en though the ne. clothes you recently bought .ill certainly depreciate$ you .ould not .ant to trac2 this depreciation since you ha,e no intention of reselling the clothes and there is no ta0 implications to the depreciation on clothing. -o$ for this e0ample$ the purchase of ne. clothes should be recorded as a pure e0pense... you spent the money$ and it is gone. :sset appreciation occurs .hen something you o.n increases in ,alue o,er time. 8hen you o.n as asset .hich has increased in ,alue$ the difference bet.een the original purchase price and the ne. ,alue is 2no.n as unreali8ed gains. 8hen you sell the asset$ the profit you earn is 2no.n as reali8ed gains or capital gains. :n e0ample of an asset from .hich you could ha,e unrealiJed gains$ and e,entually capital gains$ is stoc2 in a publicly traded company.

$stimating Ialuation
:s mentioned in the introduction to this chapter$ capital gains are the profits recei,ed from the same of an asset. This section .ill describe ho. to record capital gains in GnuCash. The accounting methods for handling asset appreciation differs some.hat from depreciation because typically you are only concerned .ith the moment you sell the asset and realiJe the capital gains. This is opposed to the continuous nature of trac2ing depreciation. Capital gains are an important sub9ect in the .orld of ta0ation$ because go,ernments tend to be Guite interested in ta0ing capital gains in one manner or another.

,ote
:s al.ays$ there are e0ceptions. /f you hold a bond that pays all of its interest at maturity$ ta0 authorities often reGuire that you recogniJe interest each year$ and refuse this to be treated as a capital gain. Consult the appropriate ta0 codes to determine the preferred treatment for each type of asset you ha,e .hich may be affected by capital gains ta0es. 6stimating the increasing ,alue of assets is generally not simple$ because often it is difficult to 2no. its e0act ,alue until the moment it is sold. -ecurities traded daily on open mar2ets such as stoc2 e0changes are possibly the easiest type of asset to predict the ,alue of$ and selling the asset at mar2et prices may be as simple as calling a bro2er and issuing a 5ar2et 4rder. 4n the other hand$ estimating the ,alue of a house is more difficult. <omes are sold less often than stoc2s$ and the sales tend to in,ol,e e0pending considerable effort and negotiations$ .hich means that estimates are li2ely to be less precise. -imilarly$ selling a used automobile in,ol,es a negotiation process that ma2es pricing a bit less predictable. +alues of collectible ob9ects such as 9e.elry$ .or2s of art$ baseball cards$ and >1eanie 1abies> are e,en harder to estimate. The mar2ets for such ob9ects are much less open than the securities mar2ets and less open than the housing mar2et. 8orse still are one-of-a-2ind assets. (actories often contain presses and dies customiJed to build a ,ery specific product that cost tens or hundreds of thousands of dollarsC this eGuipment may be .orthless outside of that ,ery specific conte0t. /n such cases$ se,eral conflicting ,alues might be attached to the asset$ none of them unambiguously correct. The general rule of thumb in accounting for estimating unrealiJed gains )or loses* is that you should only re,alue assets such as stoc2s .hich are readily sellable and for .hich there are ,ery good estimates of the ,alue. (or all other assets$ it is better to simply .ait until you sell them$ at .hich time you can e0actly determine the capital gains. 4f course$ there is no hard rule on this$ and in fact different accountants may prefer to do this differently.

)ccount 'etup
:s .ith most accounting practices$ there are a number of different .ays to setup capital gains accounts. 8e .ill present here a general method .hich should be fle0ible enough to handle most situations. The first account you .ill need is an (sset "ost account )GnuCash account type >asset>*$ .hich is simply a place .here you record the original purchase of the asset. 'sually this purchase is accomplished by a transaction from your ban2 account. /n order to 2eep trac2 of the appreciation of the asset$ you .ill need three accounts. The first is an Unreali8ed 0ains asset account in .hich to collect the sum of all of the appreciation amounts. The 'nrealiJed Gains asset account is balanced by a Unreali8ed 0ains income account$ in .hich all periodic appreciation income is recorded. (inally$ another income account is necessary$ called a $eali8ed 0ains in .hich you record the actual capital gains upon selling the asset. 1elo. is a generic account hierarchy for trac2ing the appreciation of 2 assets$ /T65" and /T652. The >:ssets=/T65"=Cost> accounts are balanced by the >:ssets=1an2> account$ the >:ssets=/T65K='nrealiJed Gains> accounts are balanced by the >/ncome='nrealiJed Gains> account.

-:ssets -/T65" -Cost -'nrealiJed Gain -/T652 -Cost -'nrealiJed Gain -1an2 -/ncome -'nrealiJed Gains -;ealiJed Gains

$9ample
!etFs suppose you buy an asset e0pected to increase in ,alue$ say a Degas painting$ and .ant to trac2 this. )The insurance company .ill care about this$ e,en if nobody else does.* -tart .ith an account hierarchy similar to than sho.n in the pre,ious section$ but replace >/T65"> .ith >Degas> and you can remo,e the >/T652> accounts. 8e .ill assume that the Degas painting had an initial ,alue of one hundred thousand dollars. 1egin by gi,ing your self R"00000 in the ban2 and then transferring that from your ban2 account to your >:sset=Degas> account )the asset purchase transaction*. 3ou should no. ha,e a main account .indo. .hich appears li2e this=

The asset appreciation e0ample main .indo.

%nrealiKed Gains
: month later$ you ha,e reason to suspect that the ,alue of your painting has increased by R"0000 )an unrealiJed gain*. /n order to record this you transfer R"0000 from your :ccrued Gains income account to your asset 'nrealiJed Gains account. 3our main .indo. .ill resemble this=

This image sho.s the asset appreciation main .indo.

'elling
!etFs suppose another month later prices for Degas paintings ha,e gone up some more$ in this case about R20000$ you estimate. 3ou duly record the R20000 as an unrealiJed income li2e abo,e$ then decide to sell the painting. Three possibilities arise. 3ou may ha,e accurately estimated the unrealiJed gain$ underestimated the unrealiJed gain$ or o.erestimated the unrealiJed gain. ". (ccurate estimation of unrealiJed gain. 3our optimistic estimate of the paintingFs ,alue .as correct. (irst you must record that the profits made are no. realiJed gains$ not unrealiJed gains. Do this by transferring the income from the >/ncome='nrealiJed Gains> to the >/ncome=;ealiJed Gains> account. -econdly$ you must credit your ban2 account .ith the selling price of the painting. This money comes directly from your >:sset=Degas> sub-accounts. Transfer the full >:sset=Degas=Cost> ,alue into >:sset=1an2>$ and the full >:sset=Degas='nrealiJed Gain> into >:sset=1an2>. These transactions should no. appear as follo.s= Table J 1 Turning an )ccrued Gain into a RealiKed Gain (ccount /ncome='nrealiJed Gains :sset=Degas=Cost &rans#er to /ncome=;ealiJed Gains :sset=1an2 &ransaction (mount (ccount &otal R30000 R"00000 R0 R0

:sset=Degas='nrealiJed :sset=1an2 R30000 R0 Gains This lea,es the >:sset=1an2> account .ith a total of R"30000 and >/ncome=;ealiJed Gains> .ith a total of R30000. 2. Under estimation of unrealiJed gain. 3ou .ere o,er-optimistic about the ,alue of the painting. /nstead of the R"30000 you thought the painting .as .orth are only offered R"20000. 1ut you still decide to sell$ because you ,alue R"20000 more than you ,alue the painting. The numbers change a little bit$ but not too dramatically.

'nder construction 3. O.er estimation of unrealiJed gain. 3ou manage to sell your painting for more than you thought in your .ildest dreams. The e0tra ,alue is$ again$ recorded as a gain$ i.e. an income. 'nder Construction

Caution about Ialuation

:s .e see in this e0ample$ for non-financial assets$ it may be difficult to correctly estimate the ``trueFF ,alue of an asset. /t is Guite easy to count yourself rich based on Guestionable estimates that do not reflect >money in the ban2.> 8hen dealing .ith appreciation of assets$

1e careful .ith your estimation of ,alues. Do not indulge in .ishful thin2ing. &e,er$ e,er$ count on money you do not ha,e in your ban2 or as cash. 'ntil you ha,e actually sold your asset and got the money$ any numbers on paper )or magnetic patterns on your hard dis2* are merely that. /f you could realistically con,ince a ban2er to lend you money$ using the assets as collateral$ that is a pretty reasonable e,idence that the assets ha,e ,alue$ as lenders are professionally suspicious of dubious o,erestimations of ,alue. 1e a.are= all too many companies that appear >profitable> on paper go out of business as a result of running out of cash$ precisely because >,aluable assets> .ere not the same thing as cash.

Ta9ation
Ta0ation policies ,ary considerably bet.een countries$ so it is ,irtually impossible to say anything that .ill be uni,ersally useful. <o.e,er$ it is common for income generated by capital gains to not be sub9ect to ta0ation until the date that the asset is actually sold$ and sometimes not e,en then. &orth :merican home o.ners usually find that .hen they sell personal residences$ capital gains that occur are e0empt from ta0ation. /t appears that other countries treat sale of homes differently$ ta0ing people on such gains. German authorities$ for e0ample$ ta0 those gains only if you o.ned the property for less than ten years. Chris 1ro.ne has a story from his professional ta0 preparation days .here a family sold a farm$ and e0pected a considerable ta0 bill that turned out to be ,irtually nil due to ha,ing o.ned the property before "IH" ).herein lies a critical >+aluation Day> date in Canada* and due to it being a dairy farm$ .ith some really peculiar resulting deductions. The point of this story is that .hile the presentation here is fairly simple$ ta0ation often gets terribly complicated...

Chapter 1L 3ultiple Currencies

Table of Contents 1asic Concepts :ccount -etup GnuCash Currency -upport -etting /nternational #references ;ecording Currency 60change )<o.-To* ;ecording #urchases in a (oreign Currency )<o.-To* Trac2ing Currency /n,estments )<o.-To* ;econciling -tatements in a (oreign Currency )<o.-To* 'pdating 60change ;ates )<o.-To* #utting /t :ll Together )60amples* This chapter .ill sho. you ho. to setup your GnuCash accounts to use multiple currencies.

(asic Concepts
GnuCash supports the use of multiple currencies in different accounts. (or e0ample$ you can ha,e a ban2 account setup in 6uros$ and another using 1ritish #ounds. -ome of the issues .hich arise .hen using multiple currencies is ho. do you transfer funds bet.een accounts .ith different currenciesK <o. do you calculate the o,erall ,alue .hen you ha,e miJed currency accountsK <o. do reports deal .ith mi0ed currenciesK

)ccount 'etup
3our default account currency is set in 6dit -S #references -S /nternational -S &e. :ccount Default Currency. 3ou should set this parameter correctly$ as it .ill sa,e you much time .hen building your account structure. 8hen you create a ne. account$ you ha,e the option to define the commodity. (or currency accounts$ you can specify any one of the hundreds of currencies supported by GnuCash by simply selecting it from the currency commodity list. 3ou .ill notice that the default currency is al.ays .hate,er you ha,e defined in the preferences. -o$ if you mostly .or2 .ith 6uros$ but ha,e the occasional 6thiopian 1irr account$ be sure to set your preferences to 6uro. :s an e0ample$ letFs set up a typical ban2 account scenario .here you mostly .or2 in '- Dollars$ but do also ha,e a 6uropean ban2 account using the 6uro currency. -o$ setup 2 ban2 accounts$ one using the 6uro currency$ and another in dollars. 4ne possible account structure for this .ould be= -:ssets )'-D* -1an2s )'-D* -'- 1an2 )'-D* -6uropean 1an2 )6';* -6Guity )'-D* --tarting 1alances '-D )'-D* --tarting 1alances 6'; )6';* &ote= the currency of each account is sho.n in parenthesis. -ince in this e0ample you mostly .or2 in '-D$ all of the parent accounts are set to '-D. 4f course$ if you mostly .or2 in 6uros$ you could change the currency of these parent accounts to 6';. To totals sho.n in the account tree .indo. .ill al.ays be con,erted to the currency of each particular account. &otice$ .e also setup 2 -tarting 1alances eGuity accounts$ used to initially populate the 2 ban2s.

,ote
3ou could also setup 9ust a single -tarting 1alance account and use a currency transfer to populate the >different currency> accounts. <o.e,er$ this is more ad,anced option$ .hich is e0plain in a later section. 1elo. you see the result of this e0ample$ in .hich .e start .ith '-D "0000 and 6'; "0000 in the t.o ban2 accounts. &otice that the total of the parent accounts only sho. the ,alue of the currency of subaccounts .ith matching currencies. /n the future you can setup the e0change rates bet.een the currencies$ and the parent accounts .ill calculate the con,erted ,alue of all subaccounts. -ee the later section on ho. to do this.

/nitial setup of 2 ban2 account .ith different currencies. &otice that the >Total );eport*> column is being displayed. This is configured in the 4ptions -S :ccount (ields to Display area.

GnuCash Currency 'upport

GnuCash supports o,er a hundred currencies$ from the :ndorran (ranc to the Bimbab.e Dollar. 3ou .ill also find supports for some lesser popular currencies li2e the '- Dollar$ Canadian Dollar$ 6uropean 6uro$ and 1ritish #ound.

'etting #nternational 5references

(or a full e0planation of the /nternational #references a,ailable$ see the second chapter of this guide entitled >The 1asics>$ specifically the -ection >-etting #references>.

Recording Currency $9change 8Ho"6To:

/n order to ,ie. your account ,alues displayed in a currency other than their nati,e currency$ you .ill need to set up currency e0change rates. This is accomplised using the #rice 6ditor. 4pen the #rice 6ditor by going to Tools -S #rice 6ditor. Clic2 on the :dd button to add a ne. currency e0change. : .indo. .ill appear to allo. you to select the commodity you .ish to define the e0change rate for. Clic2 on -elect and set the Type to /-442"H and the Currency%security to 6'; )6uro*. This .indo. should appear li2e this=

#rice 6ditor -elect Commodity 8indo. Clic2 42 and in the -elect Commodity .indo.$ set the e0change rate bet.een the selected commodity and the selected currency. /n this e0ample$ .e .ill set the e0change rate to " 6'; to " '-D.

#rice 6ditor -elect Commodity 8indo.

The #rice 6ditor .indo. after setting the e0change rate bet.een 6uros and '- Dollars

The main account .indo. after setting the e0change rate bet.een 6uros and '- Dollars

Recording 5urchases in a Foreign Currency 8Ho"6To: Tracking Currency #nvestments 8Ho"6To: Reconciling 'tatements in a Foreign Currency 8Ho"6To: %pdating $9change Rates 8Ho"6To: 5utting #t )ll Together 8$9amples: Chapter 11 1epreciation
Table of Contents 1asic Concepts 6stimating +aluation Depreciation -chemes :ccount -etup 60ample This chapter .ill present some of the techniGues used to 2eep trac2 of the changing ,alues of assets$ /6= depreciation$ unrealiJed gains$ capital gains.

(asic Concepts
This chapter .ill present some of the techniGues used to 2eep trac2 of the changing ,alues of assets$ /6= depreciation$ unrealiJed gains$ capital gains. Certain resellable assets can change ,alue o,er time$ such as stoc2s$ bonds$ houses$ or cars. -ome assets )eg= a stoc2* could increase in ,alue$ some )eg= a car* could decrease in ,alue. /t is important to be able to trac2 some of these time-dependent asset ,aluations$ this chapter .ill sho. you ho.. #robably e,erything you o.n .ill increase or decrease in ,alue o,er time. -o$ the Guestion is for .hich of these assets should you trac2 this changing ,alueK The simple ans.er is that you only need to trac2 this for items .hich could be sold for cash in the future or .hich relate to ta0ation. Consumable and disposable items )eg= food$ gas for your car$ or printer paper* are ob,iously not in,ol,ed. Thus$ e,en though the ne. clothes you recently bought .ill certainly depreciate$ you .ould not .ant to trac2 this depreciation since you ha,e no intention of reselling the clothes and there is no ta0 implications to the depreciation on clothing. -o$ for this e0ample$ the purchase of ne. clothes should be recorded as a pure e0pense... you spent the money$ and it is gone. Depreciation is the effect in .hich the ,alue of an asset decreases .ith time. The often used e0ample of an asset to .hich this is often applied is an automobile. :n automobile holds retained ,alue after the purchase date$ but this ,alue decreases .ith time. /f you hold assets for business purposes$ their depreciation can be treated as a deduction for ta0 purposes. Depreciation is usually recogniJed as an ongoing )accrued* e0pense$ gradually reducing the ,alue of an asset to.ard Jero. &ormally$ depreciation is only calculated on assets used for professional or business purposes$ because go,ernments donFt generally allo. you to claim depreciation deductions on personal assets$ and itFs

usually pointless to bother .ith the procedure if itFs not deductible. The only case .here you may .ant to trac2 depreciation for personal assets .ould be if you .ill sell the asset in the future and you .ant to trac2 your potential personal .orth.

,ote
8arning= 1e a.are that different countries can ha,e substantially different ta0 policies for depreciationC all that this document can really pro,ide is some of the underlying ideas to help you apply your >fa,orite> ta0%depreciation policies.

$stimating Ialuation
: central issue .ith depreciation is to determine ho. you .ill estimate the future ,alue of the asset. Compared to the often uncertain estimates one has to do .here appreciation of assets is concerned$ .e are on some.hat firmer ground here. 'sing sources listed belo. should ma2e it fairly straight for.ard to estimate the future ,alue of your depreciating assets.

&ax "odes7 (or businesses that .ant to use depreciation for ta0 purposes$ go,ernments tend to set up precise rules as to ho. you are reGuired to calculate depreciation. Consult your local ta0 codes$ .hich should e0plicitly state ho. to estimate depreciation. "ar !lue !ook7 (or automobiles$ it is easy to loo2 up in references such as >1lue 1oo2s> estimates of .hat an automobile should be .orth after some period of time in the future. (rom this you .ill be able to de,elop a model of the depreciation.

1epreciation 'chemes
: depreciation scheme is a mathematical model of ho. an asset .ill lose ,alue o,er time. (or e,ery asset .hich undergoes depreciation$ you .ill need to decide on a depreciation scheme. -ince depreciation of assets is ,ery often dri,en by ta0 policies$ the discussion of depreciation .ill focus in that direction$ on some of the more common depreciation calculation schemes. 4nce you ha,e an idea of the future ,alue of your asset$ you must decide on a depreciation scheme )remember$ this may be dictated by your local ta0 codes*. This section .ill present 3 of the more popular depreciation schemes= linear$ geometric$ and sum o# digits. ". 'inear depreciation diminishes the ,alue of an asset by a fi0ed amount each period until the net ,alue is Jero. This is the simplest calculation$ as you estimate a useful lifetime$ and simply di,ide the cost eGually across that lifetime. 60ample= 3ou ha,e bought a computer for R"E00 and .ish to depreciate it o,er a period of E years. 6ach year the amount of depreciation is R300$ leading to the follo.ing calculations= Table 11 1 Linear 1epreciation 'cheme $9ample 1ear Depreciation $emaining 9alue 0 " 2 3 4 300 300 300 300 "E00 "200 I00 700 300

E 300 0 2. 0eometric depreciation is depreciated by a fi0ed percentage of the asset ,alue in the pre,ious period. This is a front-.eighted depreciation scheme$ more depreciation being applied early in the period. /n this scheme the ,alue of an asset decreases e0ponentially lea,ing a ,alue at the end that is larger than Jero )i.e.= a resale ,alue*.

60ample= 8e ta2e the same e0ample as abo,e$ .ith an annual depreciation of 30[. Table 11 . Geometric 1epreciation 'cheme $9ample 1ear Depreciation $emaining 9alue 0 " 2 3 4 E 4E0 3"E 220.E0 "E4.3E "0D.0E "E00 "0E0 H3E E"4.E0 370."E 2E2."0

,ote
1e.are= Ta0 authorities may reGuire )or allo.* a larger percentage in the first period. 4n the other hand$ in Canada$ this is re,ersed$ as they permit only a half share of >Capital Cost :llo.ance> in the first year. The result of this approach is that asset ,alue decreases more rapidly at the beginning than at the end .hich is probably more realistic for most assets than a linear scheme. This is certainly true for automobiles. 3. %um o# digits is a front-.eighted depreciation scheme similar to the geometric depreciation$ e0cept that the ,alue of the asset reaches Jero at the end of the period. This is a front-.eighted depreciation scheme$ more depreciation being applied early in the period. This method is most often employed in :nglo%-a0on countries. <ere is an illustration= 60ample= (irst you di,ide the asset ,alue by the sum of the years of use$ e.g. for our e0ample from abo,e .ith an asset .orth R"E00 that is used o,er a period of fi,e years you get "E00%)"Q2Q3Q4QE*U"00. Depreciation and asset ,alue are then calculated as follo.s= Table 11 4 'um of 1igits 1epreciation 'cheme $9ample 1ear Depreciation $emaining 9alue 0 " 2 3 4 E "00\EUE00 "00\4U400 "00\3U300 "00\2U200 "00\"U"00 "E00 "000 700 300 "00 0

)ccount 'etup
:s .ith most accounting practices$ there are a number of different .ays to setup depreciation accounts. 8e .ill present here a general method .hich should be fle0ible enough to handle most situations. The first account you .ill need is an (sset "ost account )GnuCash account type >asset>*$ .hich is simply a place .here you record the original purchase of the asset. 'sually this purchase is accomplished by a transaction from your ban2 account. /n order to 2eep trac2 of the depreciation of the asset$ you .ill need t.o depreciation accounts. The first is an (ccumulated Depreciation account in .hich to collect the sum of all of the depreciation amounts$ and .ill contain negati,e ,alues. /n GnuCash$ this is an account type asset. The :ccumulated Depreciation account is balanced by a Depreciation Expense account$ in .hich all periodic depreciation e0penses are recorded. /n GnuCash$ this is an account type expense. 1elo. is a generic account hierarchy for trac2ing the depreciation of 2 assets$ /T65" and /T652. The >:sset Cost> accounts are balanced by the >1an2> account$ the :ccumulated Depreciation account is

balanced by the Depreciation 60pense account. -:ssets -/T65" -Cost ):sset Cost account* -Depreciation ):ccumulate Depreciation account* -/T652 -Cost ):sset Cost account* -Depreciation ):ccumulate Depreciation account* -1an2 -60penses -Depreciation )Depreciation 60pense account* 4ne of the features of the account hierarchy sho.n abo,e is that you can readily see some important summary ,alues about your depreciating asset. The >:ssets=/T65"> account total sho.s you the current estimated ,alue for item"$ the >:ssets=/T65"=Cost> sho.s you .hat you originally paid for item"$ >:ssets=/T65"=Depreciation> sho.s you your accrued depreciation for item"$ and finally$ >60penses=Depreciation> demonstrates the total accrued depreciation of all your assets. /t is certainly possible to use a different account hierarchy. 4ne popular account setup is to combine the (sset "ost and (ccrued Depreciation asset accounts. This has the ad,antage of ha,ing fe.er accounts cluttering your account hierarchy$ but .ith the disad,antage that to determine some of the summary details mentioned in the paragraph abo,e you .ill ha,e to open the account register .indo.s. :s .ith most things$ there are many .ays to do it$ find a .ay that .or2s best for you. The actual input of the depreciation amounts is done by hand e,ery accounting period. There is no .ay in GnuCash )as of yet* to perform the depreciation scheme calculations automatically$ or to input the ,alues automatically into the appropriate accounts. <o.e,er$ since an accounting period is typically one year$ this really is not much .or2 to do by hand.

$9ample
!etFs go ahead and step through an e0ample. /magine you are a photographer and you use a car and an e0pensi,e camera for your personal business. 3ou .ill .ant to trac2 the depreciation on these items$ because you can probably deduct the depreciation from your business ta0es. The first step is to build the account hierarchy )as sho.n in the pre,ious section$ replace /T65" and /T652 .ith >car> and >camera>*. &o.$ record the purchase of your assets by transferring the money from your ban2 account to the appropriate (sset "ost accounts for each item )eg= the >:ssets=Car=Cost> account for the car*. /n this e0ample$ you start .ith R302 in the ban2$ the car cost R202 and the camera cost R"02 and .ere both purchased on anuary "$ 2000.

The asset depreciation e0ample main .indo.$ before depreciation !oo2ing at the ta0 codes$ .e realiJe that .e must report depreciation on these items using the >sum of digits> scheme$ o,er a E year period. -o$ the yearly depreciation amounts for the car come to R777H$ RE333$ R4000$ R277H$ R"333 for years " to E respecti,ely$ rounded to the nearest dollar. The yearly depreciation amounts for the camera are R3333$ R277H$ R2000$ R"333$ R77H. Consult the pre,ious section on Depreciation -chemes for the formula for calculating these ,alues. (or each accounting period )/6= fiscal year* you record the depreciation as an e0pense in the appropriate (ccrued Depreciation account )eg= the >:sset=Car=Depreciation> account for the car*. The t.o .indo.s belo. sho. your carFs accrued depreciation account and the main .indo. after the third year )/6= three periods* of depreciation using this >sum of digits> scheme.

The asset depreciation register .indo.

The asset depreciation main .indo.

,ote
: 8ord of Caution= -ince depreciation and ta0 issues are closely related$ you may not al.ays be free in choosing your preferred method. (i0ing .rong calculations .ill cost a .hole lot more time and trouble than getting the calculations right the first time$ so if you plan to depreciate assets$ it is .ise to ma2e sure of the schemes you .ill be permitted or reGuired to use.

Chapter 1. )ccounts Receivable

Table of Contents 4,er,ie. of 1usiness (eatures 1asic Concepts /nitial -etup :ccount -etup ;egister 3our Company -ystem Components Customers &e. (ind and 6dit /n,oices &e. 6dit #ost (ind #rint :ssign -tarting /n,oice &umber Customer obs #rocess #ayment Changing the /n,oice :ppearance :ccounts ;ecei,able )or :%;* refers to products or ser,ices pro,ided by the company on credit for .hich

payment has not yet been recei,ed.

!vervie" of (usiness Features

The accounting needs of a business can be Guite different from that of a person. 1usinesses ha,e customers that o.e money$ ,endors .hich are o.ed money$ employee payroll$ more comple0 ta0 la.s$ etc. GnuCash offers some business oriented features to help facilitate these needs. :ccounts ;ecei,able ):%;* and :ccounts #ayable ):%#* are used by businesses to record sales for .hich they are not immediately paid$ or to record bills that they ha,e recei,ed$ but might not pay until later. These types of accounts are used primarily .hen youF,e got a lot of bills and receipts flo.ing in and out$ and donFt .ant to lose trac2 of them 9ust because you donFt pay%get paid right a.ay. (or most home users$ :%; and :%# are too complicated and confusing to be .orth the effort.

(asic Concepts
:ccounts ;ecei,able )or :%;* refers to products or ser,ices pro,ided by the company on credit for .hich payment has not yet been recei,ed. This is represented on the balance sheet as an asset$ because the e0pectation is that you .ill recei,e payment soon.

#nitial 'etup
To setup GnuCash to .or2 .ith handling accounts recei,able for a company$ there are 2 preliminary things that must be done. The first thing to do is to build an appropriate :ccount <ierarchy and the second is to register the company in GnuCash.

)ccount 'etup
There are many different .ays to setup a business account hierarchy. 3ou can start .ith the 1usiness :ccounts setup .hich is a,ailable from the &e. :ccount druid$ or you could build one manually. To access the prebuilt 1usiness :ccounts$ start GnuCash and clic2 on (ile -S &e. (ile and proceed until you see the list of a,ailable accounts$ select 1usiness :ccounts. 5ost li2ely$ the prebuilt 1usiness :ccount hierarchy .ill e0actly meet your needs$ ho.e,er it should be close enough that it is recommended you begin .ith it. 3ou may need ad9ust some accounts manually for it to function .ell .ith your particular situation$ but the defaults should be adeGuate for many situations. :ccounts ;ecei,able )or :%;* refers to products or ser,ices pro,ided by the company on credit for .hich payment has not yet been recei,ed. This is represented on the balance sheet as an asset$ because the e0pectation is that you .ill recei,e payment soon. To use GnuCashFs integrated accounts recei,able system$ you must first setup an account )usually a sub-account under :ssets* defined .ith account type (+$ecei.a*le. /t is .ithin this account that the integrated :%; system .ill place transactions. 1asic :%; :ccount <ierarchy= -:ssets -Chec2ing -:ccounts ;ecei,able -/ncome --ales 3ou .ill need to add additional asset$ e0pense$ and income accounts to this hierarchy for it to be useful. 1ut$ the most important aspects of this hierarchy are the use of an income account and the :ccounts ;ecei,able asset account$ .ith account type set to (+$ecei.a*le.

,ote
3ou do not need to create an indi,idual :%; account for each customer. GnuCash .ill 2eep trac2 of customers internally and pro,ides reports per-customer based on the internal trac2ing.

Register &our Company

:fter you ha,e built your account structure$ you .ill .ant to register the GnuCash file as belonging to your company. To do so$ add your 1usiness &ame$ :ddress and G-T number. Clic2 on (ile -S #roperties. Type the 1usiness name and address$ add an empty line and add the G-T number= NG-T= "234-E7HD;TO. Clic2 4?.

'ystem Components
GnuCash has an integrated accounts recei,able system. The transactions generated by the :%; system .ill be placed .ithin the :ccounts ;ecei,able account$ as a record of .hat occurs$ but you do not directly .or2 .ithin this account. ;ather$ you .ill principally be .or2ing .ith the 4 integrated GnuCash :%; application components$ a,ailable from the sub-menu 1usiness -S Customers. These 4 application components are=

Customers are people or companies to .hom you sell products or ser,ices on credit. /n,oices represent the physical in,oice you send to a customer$ reGuesting payment. This in,oice contains an itemiJed list of things you sold. obs )optional* is .here you register Customer obs$ a grouping mechanism by .hich you can group in,oices to a particular customer. #rocess #ayments is .here you register money payments from a customer to your company.

/n the ne0t 4 sections of this chapter$ the abo,e 4 application components .ill be introduced.

Customers
Customers are people of companies to .hom you sell goods or ser,ices. They must be registered .ithin the :%; system.

,e"
To register a ne. customer$ enter the menu 1usiness -S Customer -S &e. Customer. (ill in the appropriate billing address for the customer$ such as Company &ame$ :ddress$ #hone$ (a0$ etc. 1elo. is a list of the other options=

/dentification - Customer &umber - can be any number you .ould li2e to use to refer to this customer$ or you may lea,e it blan2 and a number .ill be chosen automatically. /dentification - :cti,e - this chec2 bo0 is used to differentiate acti,e customers from inacti,e ones$ useful for .hen you ha,e many past customers$ and you .ant to see only the acti,e. 1illing :ddress - &ame - this is the contact name of the person to recei,e the bill. &otes - you can enter any te0t you .ould li2e to in this area$ additional commentaries about this customer. 1illing /nformation - Currency - here you can specify .hat the default billing currency .ill be. 1illing /nformation - Terms - here you can specify .hat the default billing terms .ill be for this customer. These terms must be preregistered using 1usiness -S 1illing Terms.

1illing /nformation - Ta0 /ncluded - this specifies .hether ta0 has already been included in the in,oice. 3ou can choose 3es$ &o$ or 'se Global. 3es means that the ta0 is already included in the in,oice$ &o means ta0 has not been included in the in,oice$ and 'se Global means to use the global ta0 )Dere2K*. 1illing /nformation - Ta0 Table - this allo.s you to specify a specific preregistered ta0 table to apply to in,oices to this customer. Ta0 tables must be registered from the menu item 1usiness -S Ta0 Table. -hipping :ddress - if the customers shipping address is different from the billing address$ you can enter this information in the third and final .indo.s tab entitled -hipping :ddress.

This is .hat the &e. Customer registration .indo. loo2s li2e=

&e. Customer ;egistration 8indo.

Find and $dit

To search for a pree0isting customer$ use the 1usiness -S Customers -S (ind Customers application. (rom the results of the search$ you can select a customer to edit$ or ,ie..

(ind Customer 8indo.

,ote
To return a list of all registered acti,e customers$ set the search criterion to >matches rege0>$ and place a single dot >.> in the te0t field area. Then$ clic2 (ind. The regular e0pression >.> means to match anything.

#nvoices
:n in,oice is the paper.or2 you send to a customer reGuesting payment for a product or ser,ices rendered. GnuCash can be used to generate and trac2 in,oices.

,e"
To send an in,oice to a customer you must first create a ne. in,oice. This is accomplished using the application a,ailable at 1usiness -S Customers -S &e. /n,oice. The &e. /n,oice .indo. should be filled in appropriately=

/n,oice /nfo - /n,oice /D - the identification number of this in,oice )/6= your internal number for this in,oice*. /f you lea,e it blan2$ a number .ill automatically be generated for it. /n,oice /nfo - Date 4pened - the date this /n,oice .as created. 1illing /nfo - Customer - the customer .ho is to recei,e this in,oice. 1illing /nfo - ob )optional* - the customer 9ob to associate .ith this in,oice. 1illing /nfo - 1illing /D - this is the customerFs #4 &umber or other >customer reference number> that you should use to identify your in,oices to this customer )and 9ob$ if you ha,e one*. 1illing /nfo - Terms - the paybac2 terms agreement for this in,oice$ a list of preregistered terms is a,ailable .ithin the pop up menu.

Creating a &e. /n,oice 4nce you fill in all the information for the ne. in,oice$ you .ill be presented .ith the 6dit /n,oice .indo..

$dit
(rom the 6dit /n,oice .indo. you can enter an itemiJed list of things you sold on this in,oice in a manner similar to ho. the account register .or2s.

6dit /n,oice 8indo. There are "E columns in the /n,oice 6ntries area=

Date - The date this item .as sold /n,oicedK - @ means the item is attached to this in,oice$ an empty bo0 means the item is not attached to this in,oice. /f the bo0 is empty you can attach the item to the in,oice by first selecting the item ro. and then clic2ing in this bo0. Description )optional* - .hat the item is called :ction )optional* - user defined field. Can place Cost Center info here$ or use one of the 3 predefined actions$ <ours$ 5aterial$ or #ro9ect. /ncome :ccount - .hich income account is credited .ith this income Auantity - ho. many of the items you sold 'nit #rice - the unit price of the item Discount Type - type of discount$ monetary ,alue )R* or percentage )[* Discount <o. - the discount can be computed after the ta0 is applied )S*$ before the ta0 is applied)a*$ or the discount and ta0 can be applied to the preta0 ,alue )U* Discount )optional* - total discount )in monetary units or percentage$ depending on Discount Type. 3ou can lea,e blan2 for no discount. Ta0ableK - is this item ta0ableK @ means yes$ a blan2 field means no. Ta0 /ncludedK - has the ta0 already been included in the unit priceK @ means yes$ a blan2 field means no. (or e0ample$ if there is " item of R"00 .ith a ta0 of E[$ if Ta0 /ncluded is empty then subtotal U R"00 and ta0 U RE$ .hereas if Ta0 /ncluded is true$ then subtotal U RIE and ta0 U RE Ta0 Table )optional* - this is a pop up menu of all the a,ailable ta0 tables. /f you set the item as ta0able then this ta0 table is used to compute the amount of ta0. -ubtotal )uneditable* - computed subtotal for this item )less ta0* Ta0 )uneditable* - computed ta0 for this item

8hen you ha,e finished entering all the items$ #ost the in,oice.

5ost
8hen you ha,e finished editing an in,oice and are ready to print you must #ost the in,oice. 3ou do not ha,e to post the in,oice immediately$ and in fact you should only post the in,oice .hen you are ready to print it. #osting an in,oice .ill place the in,oice transactions into an accounts recei,able account. The #ost /n,oice .indo. .ill appear as2ing you to enter the #ost Date$ the Due Date$ a Description$ and #ost to :ccount )from .hich you can select from a list of :%;ecei,able accounts*.

#ost /n,oice 8indo.

Find
To find a pree0isting in,oice$ use the 1usiness -S Customers -S (ind /n,oices application. (rom the results of the search$ you can select an in,oice to edit$ or ,ie..

,ote
1efore you can edit a pree0isting posted in,oice$ you .ill need to unpost it.

5rint
:fter you ha,e posted an in,oice$ you should print it to send to your customer. This can be done from the 6dit /n,oice .indo. using the #rint button$ or from .ithin the #rocess #ayment dialog$ or from the main .indo.= ;eports -S 1usiness ;eports -S #rintable /n,oice. 3ou can edit the in,oice options to select the in,oice you .ant to print. -ee the later section in this chapter on the #rocess #ayment dialog for instructions on printing. :n e0ample of the default GnuCash in,oice print output is sho.n belo..

/n,oice #rint 4utput

,ote
3ou can modify the appearance of the in,oice$ /6= add a company logo$ etc. To do so$ see the section in this chapter entitled >Changing the /n,oice :ppearance>.

)ssign 'tarting #nvoice ,umber

There is no easy .ay to assign an automatic starting in,oice number. GnuCash .ill start .ith number " and increment from there. 3ou can o,erride the in,oice number by typing an in,oice number into the te0t bo0 each time you create an in,oice$ but this is bound to get tiring and .ill sooner or later lead to duplicate numbers. /f$ ho.e,er$ it is important that you be able to change the in,oice starting number$ there is a .ay$ but unfortunately there is no '/ interface to do it. 3ou ha,e to hand edit your @5! data file )it should be right at the beginning of the file in the >counters> section*.

Customer Jobs
3ou can use the optional GnuCash feature called Customer obs to associate in,oices .hich fall under a single customer. This is useful for .hen you ha,e multiple >9obs> for the same customer$ and .ould li2e to ,ie. all the in,oices for one 9ob. To use customer 9obs$ you must create them using the 1usiness -S Customers -S &e. obs application. 4nce there$ you .ill see the &e. ob .indo.. The editable fields are=

ob /nfo - ob &umber )optional* - enter the number for this 9ob. /f left blan2$ a reasonable number .ill be chosen for you. ob /nfo - ob &ame - the name you .ant to call this 9ob. 4.ner /nfo - Customer - the customer associated .ith this 9ob. 4.ner /nfo - 1illing /D - the customerFs reference to this 9ob )e.g. their #4 &umber*. /tFs the >1illing /dentification> that they reGuire on your in,oices to them. ob :cti,e - toggles this 9ob being acti,e or not. This is useful to use .hen you ha,e lots of inacti,e 9obs$ it is easier to find all the acti,e ones.

&e. Customer ob To find a pree0isting customer 9ob$ use the 1usiness -S Customer -S (ind ob application. (rom the results of the search$ you can select a 9ob to edit$ or ,ie..

5rocess 5ayment
6,entually$ you .ill recei,e payment from your customers for outstanding in,oices. To register these payments$ use the #rocess #ayment application found in 1usiness -S Customers -S #rocess #ayment. The #rocess #ayment application consists of=

#ayment /nfo - Customer - the customer .ho paid you. #ayment /nfo - Date - the date you you recei,ed payment$ normally the current date. #ayment /nfo - :mount - the amount of money recei,ed. #ayment /nfo - &um - the chec2 number. #ayment /nfo - 5emo - any comments about this payment. #ost To - the :%;ecei,able account to post this transaction. Transfer :ccount - the account .here the money .ill be deposited to )a chec2ing account for

e0ample* from this payment. 1elo. is the GnuCash :ccounts ;ecei,able payment .indo..

#rocess #ayment 8indo.

,ote
4ne of the design goals in GnuCashFs :ccount ;ecei,able system .as to allo. different processes to get to the same state$ so you can reach an in,oice from different directions based on the .ay you thin2 about the problem= \ you can search for the customer first$ then list their in,oices \ you can search for in,oices by number \ you can search for in,oices by company name 4r$ if you prefer$ you could \ you can create a ne. in,oice and then select the customer \ you can search for a customer$ ,ie. their in,oices$ then clic2 >ne. in,oice>

Changing the #nvoice )ppearance

The default /n,oice style is fairly barren$ as you can see in the e0ample gi,en in the >/n,oices> section of this chapter. The default in,oice style lea,es the top part of the form blan2$ so that you print on company letterhead paper. <o.e,er$ there are some things you can do to change this default appearance. /f you go to (ile$ #roperties$ then you can enter your company name and address$ .hich .ill then be printed on the right hand side of the in,oices. To add a customiJed bac2ground$ heading banner or logo to the in,oices$ modify the in,oice style sheets. To do this$ go to 6dit -S -tyle -heets and ma2e a &e.... style sheet. 3ou .ill see a .indo. li2e this=

The &e. -tyle -heet initial .indo.. 3ou must select the (ancy style sheet template$ and choose a name for your ne. style sheet. The ne. style sheet .ill appear in the list to the left. -elect it$ and no. use the tabbed .indo. to the right to ma2e modifications. There are 4 tabs a,ailable$ Colors$ General$ /mages$ and Tables. The Colors tab allo.s you to change the colors of the ,arious sections of the in,oice. The General tab allo.s you to set the #reparer and #repared for information$ and to enable lin2s. The /mages tab allo.s you to import graphics into the style sheet$ such as your company logo. (inally$ the Tables tab allo.s you to ad9ust the spacing around the tables .hich ma2e up the in,oice. To create the graphical images$ use your fa,orite graphics application such as The Gimp or 4pen4ffice Dra.$ and sa,e the image in either G/( or #&G format. Then import them into the style sheet. 1elo. is presented a )hideous* e0ample.

The <T5! -tyle -heets .indo. .ith an e0ample 1ac2ground Tile$ <eading 1anner$ and !ogo. The placement of the images in the in,oice is as follo.s. The 1ac2ground Tile is tiled to become the bac2ground image$ the <eading 1anner goes to abo,e the in,oice te0t$ and the !ogo is placed in the

upper left corner of the in,oice to the left of the <eading 1anner. 3ou .ill probably ha,e to try a fe. different siJed images until you get the in,oices to print nicely. -ome siJing suggestions are that the !ogo should be " sGuare cm )b0.E inch*$ and the <eading 1anner should be "E cm )b7 inches* .ide and " cm )b0.E inch* tall. 8ith the style sheet configured$ .hen you print the in,oice$ you select the style sheet to use from the 4ptions menu. 1elo. is the resultant in,oice after applying the style sheet demonstrated abo,e.

The hideous in,oice .hich results from the graphics selected in the style sheet.

Chapter 14 )ccounts 5ayable

Table of Contents 1asic Concepts /nitial -etup :ccount -etup ;egister 3our Company in GnuCash -ystem Components +endors &e. (ind and 6dit 1ills &e. 6dit #ost (ind +endor obs #rocess #ayment

:ccounts #ayable )or :%#* refers to the accounting of products or ser,ices .hich a company has bought and needs to pay off.

(asic Concepts
This chapter .ill focus on :ccounts #ayable )or :%#*. :%# refers to the accounting of products or ser,ices that your company has bought$ for .hich payment needs to be scheduled.

#nitial 'etup
To setup GnuCash to .or2 .ith handling accounts payable for a company$ there are 2 preliminary things that must be done. The first thing to do is to build an appropriate :ccount <ierarchy and the second is to register the company in GnuCash.

)ccount 'etup
There are many different .ays to setup a business account hierarchy. 3ou can start .ith the 1usiness :ccounts setup .hich is a,ailable from the &e. :ccount druid$ or you could build one manually. To access the prebuilt 1usiness :ccounts$ start GnuCash and clic2 on (ile -S &e. (ile and proceed until you see the list of a,ailable accounts$ select 1usiness :ccounts. 5ost li2ely$ the prebuilt 1usiness :ccount hierarchy .ill not be perfect for your needs$ you .ill need to perform some amount of manual ad9ustments for the accounts to function .ell .ith your situation. This chapter .ill present e0ample account structures .hich you can add to your e0isting accounts. :ccounts #ayable )or :%#* refers to products or ser,ices bought by the company for .hich payment has not yet been sent. This is represented on the balance sheet as a liability$ because the e0pectation is that you .ill ha,e to pay for it. To use GnuCashFs integrated accounts payable system$ you must first setup an account )usually a sub-account under !iabilities* defined .ith account type (+,aya*le. /t is .ithin this account that the integrated :%# system .ill place transactions. 1asic :%# :ccount <ierarchy= -:ssets -1an2 -!iabilities -:ccounts #ayable -60penses -:# 60penses

,ote
&ote that you .ill need to add real asset accounts and real e0pense accounts to this hierarchy. 1ut$ the most important aspects of this hierarchy are that you need an e0pense account and an :ccounts #ayable account$ .ith account type set to (+,aya*le.

Register &our Company in GnuCash

:fter you ha,e built your account structure$ you .ill .ant to register the GnuCash file as belonging to your company. To do so$ add your 1usiness &ame$ :ddress and G-T number. Clic2 on (ile -S #roperties. Type the 1usiness name and address$ add an empty line and add the G-T number= NG-T= "234-E7HD;TO. Clic2 4?.

'ystem Components
GnuCash has an integrated accounts payable system. The transactions generated by the :%# system .ill be placed .ithin the :ccounts #ayable account$ as a record of .hat occurs$ but you do not directly .or2 .ithin this account. ;ather$ you .ill principally be .or2ing .ith the 4 integrated GnuCash :%# application components$ a,ailable from the sub-menu 1usiness -S +endors. These 4 application components are=

+endors are people or companies from .hich you buy products or ser,ices on credit. 1ills represent the physical bill you recei,e from a ,endor$ reGuesting payment. : bill contains an itemiJed list of things you purchased. obs )optional* is .here you register +endor obs$ a grouping mechanism by .hich you can group bills to a particular ,endor. #rocess #ayments is .here you register money payments to a ,endor to .hom you o.e money.

/n the ne0t 4 sections of this chapter$ the abo,e 4 application components .ill be introduced.

Iendors
: ,endor is a company or person from .hom you purchase goods or ser,ices. The ,endors must be register .ithin the :%# system.

,e"
To register a ne. ,endor$ enter the menu 1usiness -S +endor -S &e. +endor. (ill in the appropriate general information about the ,endor$ such as Company &ame$ :ddress$ #hone$ (a0$ etc. 1elo. is a list of the other options=

/dentification - +endor &umber - can be any number you .ould li2e to refer to this ,endor$ or you may lea,e it blan2 and a number .ill be chosen automatically. /dentification - :cti,e - this chec2 bo0 is used to differentiate acti,e ,endors from inacti,e ones. #ayment :ddress - &ame - this is the contact name of the person to recei,e the payment. &otes - you can enter any te0t you .ould li2e to in this area$ additional commentaries about this ,endor. (or e0ample$ the names of contact people from .ithin the ,endorFs company. #ayment /nformation - Currency - here you can specify .hat the default payment currency .ill be. #ayment /nformation - Terms - here you can specify .hat the default payment terms .ill be. These terms must be preregistered using 1usiness -S 1illing Terms. #ayment /nformation - Ta0 /ncluded - this specifies .hether ta0 has already been included in the bill. 3ou can choose 3es$ &o$ or 'se Global. 3es means that the ta0 is already included in the bill$ &o means ta0 has not been included in the bill$ and 'se Global means to use the global ta0 table specified in the >Ta0 Table> option belo.. #ayment /nformation - Ta0 Table - this allo.s you to specify a specific preregistered ta0 table to apply to bills from this ,endor. Ta0 tables must be registered from the menu item 1usiness -S Ta0 Table.

This is .hat the &e. +endor registration .indo. loo2s li2e=

&e. +endor ;egistration 8indo.

Find and $dit

To search for a pree0isting ,endor$ use the 1usiness -S +endors -S (ind +endors application. (rom the results of the search$ you can select a ,endor to edit$ or ,ie..

(ind +endor 8indo.

,ote
To return a list of all registered acti,e ,endors$ set the search criterion to >matches rege0>$ and place a single dot >.> in the te0t field area. Then$ clic2 (ind. The regular e0pression >.> means to match anything.

(ills
: bill is the paper.or2 you recei,e from a customer reGuesting payment for a product or ser,ices you purchased. GnuCash can be used to generate and trac2 bills.

,e"
8hen you recei,e a bill from a ,endor and .ant to enter it into GnuCash$ you must create a ne. bill. This is accomplished using the application a,ailable at 1usiness -S +endors -S &e. 1ill. The &e. 1ill .indo. should be filled in appropriately=

/n,oice /nfo - /n,oice /D )optional* - the identification number of the in,oice as emitted by the ,endor )/6= the ,endorFs internal number for this in,oice*. /n,oice /nfo - Date 4pened - the date the /n,oice .as emitted by the ,endor. 1illing /nfo - +endor - the issuing ,endor. 1illing /nfo - ob )optional* - the ,endor 9ob to associate .ith this bill. 1illing /nfo - 1illing /D )optional* - the ,endorFs /D for the bill )e.g.= their in,oice c*. Can be left blan2. 1illing /nfo - Terms - the paybac2 terms agreement for this bill$ a list of preregistered terms is a,ailable .ithin the pop up menu. Chargebac2 #ro9ect - Customer )optional* - the customer to associate .ith this bill$ for purposes of

charging the customer later.

Chargebac2 #ro9ect - ob )optional* - the customer 9ob to associate .ith this bill. &otes )optional* - any notes concerning the bill go here.

&e. 1ill ;egistration 8indo. 4nce you fill in all the information for the ne. bill$ you .ill be presented .ith the 6dit 1ill .indo..

$dit
(rom the 6dit 1ill .indo. you can enter an itemiJed list of things purchased on this bill$ in a manner similar to ho. the account register .or2s.

6dit 1ill 8indo. There are "" columns in the /n,oice 6ntries area=

Date - The date this item .as sold /n,oicedK - @ means the item is attached to this in,oice$ an empty bo0 means the item is not attached to this in,oice. /f the bo0 is empty you can attach the item to the in,oice by first selecting the item ro. and then clic2ing in this bo0. Description )optional* - .hat the item is called :ction )optional* - user defined field. Can place Cost Center info here$ or use one of the 3 predefined actions$ <ours$ 5aterial$ or #ro9ect. 60pense :ccount - .hich e0pense account .ill be changed for this bill Auantity - ho. many of the items .ere sold to you 'nit #rice - the unit price of the item Ta0ableK - is this item ta0ableK @ means yes$ a blan2 field means no. Ta0 /ncludedK - has the ta0 already been included in the unit priceK @ means yes$ a blan2 field means no. Ta0 Table )optional* - this is a pop up menu of all the a,ailable ta0 tables. /f you set the item as ta0able and set that the ta0 has not been included in the unit price$ then this ta0 table is used to compute the amount of ta0. -ubtotal )uneditable* - computed subtotal for this item )less ta0* 1illable - is this item billable to the chargebac2 customer%9obK

8hen you ha,e finished entering all the items$ #ost the bill.

5ost
8hen you ha,e finished editing a bill$ you should #ost the bill. 3ou do not ha,e to post the bill$ you can simply close it and return to it later$ ho.e,er you need to e,entually post it .hen you are finished editing.

#osting the bill .ill place the bill transactions into an accounts payable account. The #ost 1ill .indo. .ill appear as2ing you to enter the #ost Date$ the Due Date$ a Description$ and #ost to :ccount )from .hich you can select from a list of :%#ayable accounts*.

#ost 1ill 8indo.

Find
To find a pree0isting bill$ use the 1usiness -S +endors -S (ind 1ill application. (rom the results of the search$ you can select a bill to edit$ or ,ie..

,ote
&ote$ before you can edit a pree0isting posted bill$ you .ill need to unpost it.

Iendor Jobs
3ou can use the optional GnuCash feature called +endor obs to associate bills .hich fall under a single ,endor. This is useful for .hen you ha,e multiple >9obs> for the same ,endor$ and .ould li2e to ,ie. all the bills for one 9ob. To use ,endor 9obs$ you must create them using the 1usiness -S +endors -S &e. obs application. 4nce there$ you .ill see the &e. ob .indo.. The editable fields are=

ob /nfo - ob &umber )optional* - enter the number for this 9ob. /f left blan2$ a reasonable number .ill be chosen for you. ob /nfo - ob &ame - the name you .ant to call this 9ob. 4.ner /nfo - +endor - the ,endor associated .ith this 9ob. 4.ner /nfo - 1illing /D - the ,endorFs reference to this 9ob )e.g. their #4 &umber*. /tFs the >1illing /dentification> that they reGuire on your in,oices to them. ob :cti,e - toggles this 9ob being acti,e or not. This is useful to use .hen you ha,e lots of inacti,e 9obs$ it is easier to find all the acti,e ones.

&e. +endor ob To find a pree0isting ,endor 9ob$ use the 1usiness -S +endors -S (ind ob application. (rom the results of the search$ you can select a 9ob to edit$ or ,ie..

5rocess 5ayment
6,entually$ you .ill need to pay your bills. To do so$ use the #rocess #ayment application found in 1usiness -S +endors -S #rocess #ayment. The #rocess #ayment application consists of=

#ayment /nfo - +endor - the ,endor you .ish to pay #ayment /nfo - Date - the date you .ish to ma2e the payment$ normally the current date. #ayment /nfo - :mount - the amount of money to transfer in this payment. #ayment /nfo - &um - the chec2 number. #ayment /nfo - 5emo - any comments about this payment. #ost To - the :%#ayable account to post this transaction. Transfer :ccount - the account .here the money .ill come from )a chec2ing account for e0ample* to ma2e this payment.

1elo. is the GnuCash :ccounts ;ecei,able payment .indo..

#rocess #ayment 8indo.

Chapter 1< 5ayroll

Table of Contents 1asic Concepts :ccount -etup #rotocol -tep "= Deductions list -tep 2= Create the Transaction 5ap -tep 3= #ay the 6mployee -tep 4= #ay the Go,ernment 60ample 1uild #rotocol #ay an 6mployee #ay the Go,ernment #ayroll is a financial record of .ages$ net pay$ paid ,acations$ and deductions for an employee. This chapter .ill demonstrate ho. to trac2 payroll in GnuCash

(asic Concepts
#ayroll is a financial record of .ages$ net pay$ paid ,acations$ and deductions for an employee. 1asically$ anything that relates to gi,ing money or benefits to an employee. This is one of the more comple0 tas2s in terms of accounting$ simply because there are many different accounts$ people$ and agencies in,ol,ed in the act of paying an employeeFs salary. #ayroll is typically accounted for as an e0pense. -ometimes$ accountants .ill >store> some payroll e0penses in a short term liability account. This is useful for things such as payroll ta0es$ .hich may be paid to the go,ernment at a different times from paying employee salaries. This chapter .ill present a methodology .hich e0penses payroll immediately for salaries$ but store ta0es in a liability account.

,ote
GnuCash does not )yet* ha,e an integrated payroll system. 8hat this means is that .hile you can trac2 payroll e0penses in GnuCash$ the actual calculation of ta0es and deductions .ill ha,e to be done outside of GnuCash.

)ccount 'etup
-ome considerations that must be addressed .hen setting up your accounts is ho. your local ta0 la.s .or2. 1ecause there are so many different .ays payroll ta0es can be handled throughout the .orld$ this section .ill present a simple structure. (rom this$ you should be able to adapt your particular payroll deductions setup. !et us assume that you must pay 2 ta0es$ Ta0" and Ta02 and that each has an employee contributed component and an employer contributed component. The employeeFs salary and these t.o ta0es .ill ha,e to ha,e e0pense accounts associated$ and the ta0es .ill ha,e to ha,e liability accounts. The ta0 liability account is the place .here you accumulate the .ithheld ta0es for all of your employees$ .hich is later paid to the appropriate go,ernment agency. -imple #ayroll :ccount !ayout= -:ssets -Chec2ing -!iabilities -Ta0" )short term >storage> account* -Ta02 )short term >storage> account* -60penses --alaries -Ta0es

,ote
There is a temptation to create per-employee sub-accounts$ to trac2 each employee separately. <o.e,er$ this often leads to unmanageably large lists of accounts. /magine ho. your account structure .ould loo2 after a fe. years of employees coming and going in your company. /t is much simpler to 2eep all of your employees payroll records .ithin a single account )60pense=-alaries for e0ample* and use reports to ,ie. per-employee information.

5rotocol
GnuCash does not )yet* ha,e an integrated payroll system. 3ou can use GnuCash to trac2 your payroll e0penses$ but you .ill need to de,elop a payroll protocol and perform the calculations outside of GnuCash$ in a spreadsheet for e0ample. /n this section$ one such protocol is presented$ .hich you can use as a model.

'tep 1H 1eductions list

The first step to the payroll protocol is to create a list of all the possible ta0es and deductions for each employee$ .hich should include definitions and formulas for calculating each ,alue. This step of the protocol .ill only need to be done once$ and again in the future .hen the payroll la.s or ta0 rates change. (or our simple payroll situation .ith the t.o ta0es$ such a list .ould loo2 li2e this=

EA0$O%%A%('($1 - 6mployee gross salary EA&(X: - 6mployee contribution to ta0" )@[ of 6_G;4--_-:!:;3* EA&(XB - 6mployee contribution to ta02 )@[ of 6_G;4--_-:!:;3* "A&(X: - Company contribution to ta0" )@[ of 6_G;4--_-:!:;3* "A&(XB - Company contribution to ta02 )@[ of 6_G;4--_-:!:;3*

,ote
The employeeFs net salary )6_&6T_-:!:;3* is defined as 6_G;4--_-:!:;3 6_T:@" - 6_T:@2 and need not be placed in this list since it is composed of items that already e0ist. 3ou .ill .ant to place the actual formulas for calculating each deduction in this list. -ometimes$ these formulas can be Guite comple0$ and sometimes the formula may simply say >loo2 this number up in table @3B of the ta0 codes.> &otice that you can calculate some interesting ,alues using the abo,e definitions$ such as the total cost to the company= 6_G;4--_-:!:;3 Q C_T:@" Q C_T:@2.

'tep .H Create the Transaction 3ap

8hen you record payroll in GnuCash$ it is done .ith a single split transaction. This split transaction .ill populate the appropriate e0pense and liability accounts. /f$ in the future$ you .ant to disco,er any of the payroll details for a particular employee$ simply open the split transaction. 8ith the deductions list from abo,e in hand$ an employee split transaction map can be generated .hich maps each of the items in the list to a GnuCash account. Table 1< 1 Transaction 3ap :ccount :ssets=Chec2ing 60penses=-alarie 6_G;4--_-:!:;3 s !iabilities=Ta0" !iabilities=Ta02 60penses=Ta0" !iabilities=Ta0" 60penses=Ta02 !iabilities=Ta02 C_T:@2 C_T:@2 C_T:@" C_T:@" 6_T:@" 6_T:@2 /ncrease Decrease 6_&6T_-:!:;3

'tep 4H 5ay the $mployee

Go to the account from .hich the employee .ill be paid$ for e0ample your :sset=Chec2ing account. 4pen a split transaction and enter the real ,alues using the Transaction 5ap abo,e as a guide. ;epeat this for all employees.

Tip
This manual process is tedious$ especially if you ha,e a large number of employees. 4ne GnuCash tool you .ill certainly .ant to ma2e use of .hen entering employee payroll is duplicate transaction )use the Duplicate tool bar button*. 'sing this .ill sa,e you from

ha,ing to enter all the transaction splits for each employee. 3ou .ill still need to change the amounts of money to match each employeeFs real payroll ,alues$ but at least you do not need to build the split each time.

'tep <H 5ay the Government

The final thing to do is to pay the ta0es to the go,ernment. The liability accounts ha,e been collecting the ta0es for ,arious go,ernment agencies$ and periodically you .ill need to send a chec2 to the go,ernment to pay this charge. To do so$ you simply enter a 2 account transaction in )for e0ample* your chec2ing account to pay off the ta0 liability. The transaction .ill be bet.een the chec2ing account and the liability account$ no e0pense account are in,ol,ed.

$9ample
'sing the account setup seen pre,iously$ letFs go through an e0ample. :ssume that there are 2 employees )6" and 62* .hich each earn R"000 per month gross salary. The employee contribution to Ta0" and Ta02 are "0[ and E[ respecti,ely. The company contribution to Ta0" and Ta02 are "E[ and "0[ each on top of the employees gross salary. -taring .ith RE02 in the ban2$ and before doing any payroll$ the account hierarchy loo2s li2e this=

#ayroll /nitial -etup

(uild 5rotocol
The deductions list for employee "=

EA0$O%%A%('($1 - 6mployee gross salary - C:??? EA&(X: - 6mployee contribution to ta0" - C:?? )"0[ of 6_G;4--_-:!:;3* EA&(XB - 6mployee contribution to ta02 - CD? )E[ of 6_G;4--_-:!:;3* "A&(X: - Company contribution to ta0" - C:D? )"E[ of 6_G;4--_-:!:;3* "A&(XB - Company contribution to ta02 - C:?? )"0[ of 6_G;4--_-:!:;3*

Table 1< . Transaction 3ap for $mployee 1 :ccount :ssets=Chec2ing 60penses=-alarie R"000 s )6_G;4--_-:!:;3* !iabilities=Ta0" !iabilities=Ta02 R"00 )6_T:@"* RE0 )6_T:@2* /ncrease Decrease RDE0 )6_&6T_-:!:;3*

60penses=Ta0" !iabilities=Ta0" 60penses=Ta02 !iabilities=Ta02

R"E0 )C_T:@"* R"E0 )C_T:@"* R"00 )C_T:@2* R"00 )C_T:@2*

5ay an $mployee
&o.$ enter the first split transaction for employee " in the chec2ing account. The split transaction .ill loo2 li2e this=

6mployee " -plit Transaction

Tip
8hen paying employees$ enter only the employee name in the Description area. /f you decide to use GnuCashFs chec2 printing capabilities$ the chec2 .ill automatically be made out to the employee correctly. /f you .ant to record other information in the transaction besides the employee name$ use the &otes area$ a,ailable .hen ,ie.ing the ;egister in double-line mode. ;epeat this for the second employee$ .hich lea,es the account hierarchy loo2ing li2e this=

:ccount Tree :fter -alaries #aid

5ay the Government

The !iability=Ta0" and !iability=Ta02 accounts .ill continue to trac2 ho. much you must pay to the go,ernment agencies responsible for each. 8hen it is time to pay these agencies$ ma2e a transaction from the chec2ing account to the liability accounts. &o e0pense accounts are in,ol,ed. The main account .ill then appear li2e this for this e0ample=

:ccounts :fter #aying Go,ernment

)ppendi9 ) 3igration Guide

Table of Contents 'sing :ccounts ,s. Categories 4rganiJation of A/( (iles )Discussion* Common Duplication /ssues )Discussion* Chec2ing A/( Data )Discussion* Con,erting @5! GnuCash (ile This appendi0 is to help current users of other financial soft.are pac2ages in their migration to GnuCash. 8e address the conceptual differences bet.een the layout of GnuCash accounts ,ersus other soft.are pac2ages.

%sing )ccounts vs Categories

/f you are familiar .ith other personal finance programs$ you are already accustomed to trac2ing your income and e0penses as categories. -ince GnuCash is a double-entry system )refer to section 2."*$ incomes and e0penses are trac2ed in accounts. The basic concept is the same$ but the account structure allo.s more consistency .ith accepted business practices. -o$ if you are a business user as .ell as a home user$ GnuCash ma2es it easy to 2eep trac2 of your business as .ell as your personal accounts. /ncome and e0pense accounts gi,e you the same information you .ould get .ith categories$ but they also gi,e you more fle0ibility in entering your transactions. /n GnuCash$ you ha,e the option to enter transactions directly into income and e0pense accounts through their account registers. 4ther programs that use categories do not offer this option$ because there is no Naccount registerO for a category. 3ou also ha,e the option in GnuCash to treat income and e0pense accounts e0actly as you .ould treat categories$ if you are more comfortable .ith that method. /n Auic2enP and similar programs$ transactions reGuire an account and a category. -ubstitute an income or e0pense account name in GnuCash .here you .ould normally enter a category name in the other programs$ and the result should be the same. 8e .ill discuss transaction entry in Chapter 4 in greater detail.

!rganiKation of 7#F Files 81iscussion: Common 1uplication #ssues 81iscussion: Checking 7#F 1ata 81iscussion: Converting M3L GnuCash File
The Gnucash @5! data file can be tranformed to almost any other data format )e.g.$ A/($ C-+...* Guite easily if one is familiar .ith @-!T. The Gnucash data file is .ell-formed @5!$ and it can therefore be run through an @-!T parser .ith an associated stylesheet. This allo.s one to transform the file to 9ust about any format that can be designed$ gi,en a properly .ritten stylesheet. : fe. steps need to be follo.ed. The .riting of a stylesheet is a tas2 for a different time$ but if you can get one .ritten$ hereFs .hat you need to do= ". Copy the Gnucash to a .or2ing file. 5odify the .or2ing fileFs agnc-,2S tag to read something li2e .hatFs belo.. &ote that you can pretty much put anything you .ant in the FU>...>F partC / used the ';! because itFs traditional )if such can be said about such a young technologyL*. agnc-,2 0mlns=cdU>http=%%....gnucash.org%@5!%cd> 0mlns=boo2U>http=%%....gnucash.org%@5!%boo2> 0mlns=gncU>http=%%....gnucash.org%@5!%gnc> 0mlns=cmdtyU>http=%%....gnucash.org%@5!%cmdty> 0mlns=trnU>http=%%....gnucash.org%@5!%trn> 0mlns=splitU>http=%%....gnucash.org%@5!%split> 0mlns=actU>http=%%....gnucash.org%@5!%act> 0mlns=priceU>http=%%....gnucash.org%@5!%price> 0mlns=tsU>http=%%....gnucash.org%@5!%ts> 0mlns=slotU>http=%%....gnucash.org%@5!%2,pslot> 0mlns=custU>http=%%....gnucash.org%@5!%cust> 0mlns=addrU>http=%%....gnucash.org%@5!%custaddr>S 2. Create an @-!T stylesheet containing the transformation your desire$ or obtain one thatFs already .ritten ):(:/?$ there arenFt any$ but /Fm .or2ing on a C-+ one*. 3. /nstall an @-!T processor such as -a0on )http=%%sa0on.sourceforge.net%* or @alan)http=%%0ml.apache.org%*. :ny conforming processor .ill do$ really... 4. ;un the .or2 file and the stylesheet through the processor according to the processorFs instructions. E. 3ou .ill no. ha,e a file in the desired output format. :n enterprising indi,idual could go so far as to .rite a stylesheet to transform the Gnucash data file to an 4pen4ffice spreadsheet )or ,ice,ersa$ for that matter*. -uch things as A/( ought to be a little less .or2. 1enefits are that you donFt need to .rite a -cheme module or a ne. C routine to do this transformation. :nyone .ho 2no.s or can learn @5! and @-!T can perform this tas2. &ot much harder$ really$ than .riting a 8eb page.... :nyho.$ / 9ust .anted this tidbit to be captured some.here permanently. / 2no. the process .or2s on ".D.4 and C+- <6:D datafiles$ and ought to .or2 on earlier ".D.0 ,ersions$ too. <a,enFt muc2ed .ith ".7.0 in a .hile$ but it \should\ .or2 there$ too...

)ppendi9 ( Fre0uently )sked 7uestions

Table of Contents -ources of /nformation A= 8hereFs the (:AK A= :re there mailing lists for GnuCashK A= /s there a searchable archi,e for the mailing listsK A= :re there other means of obtaining support for GnuCashK General /nformation A= Can / run GnuCash on 8indo.sK A= / heard it is too hard to compile GnuCashL A= /s there a batch mode )non-interacti,e* a,ailable for GnuCash$ for building reports$ etcK A= Can multiple people access the same datafile in GnuCashK A= 8hy is GnuCash .ritten in CK A= 8hy donFt you re.rite GnuCash in programming language 0yJ so that / can contribute easilyK A= / really .ant feature @3B but GnuCash doesnFt ha,e it. <o. do / get it addedK A= /s there a .eb interface a,ailable for GnuCashK A= <o. can / pro,ide security for GC data using C(-$ etc.* A= <o. can / contribute to the GnuCash pro9ectK A= / thin2 / found a bug. <o. do / report itK 'sing GnuCash A= <o. can / mo,e the transactions from account : into account 1$ thus combining themK A= /s it possible to merge t.o gnucash filesK A= <o. can / sa,e a template of my account structureK A= 8hen / search for customers )or anything else for that matter*$ ho. can / return a list of e,erythingK A= <o. can / record a transaction on different dates )actual date and ban2 date*K :ccounting A= <o. do / treat ta0esK :s an account payable or as an e0penseK This is a list of Guestions as2ed on the mailing lists for .hich there really is no section in the documentation co,ering the sub9ect.

'ources of #nformation
7H *here+s the F)7N
:= 3ouFre loo2ing at it. The definiti,e copy can be found .ithin the GnuCash Guide http=%%....gnucash.org%docs%,".D%C%gnucash-guide%

7H )re there mailing lists for GnuCashN

:= 3es. Go to http=%%....gnucash.org%cgi-bin%mailman%listinfo%gnucash-user and http=%%....gnucash.org%cgi-bin%mailman%listinfo%gnucash-de,el to subscibe.

7H #s there a searchable archive for the mailing listsN

:= 3es$ you can search the mail list archi,es at http=%%ne.s.gmane.org%gmane.comp.gnome.apps.gnucash.de,el and http=%%ne.s.gmane.org%gmane.comp.gnome.apps.gnucash.user )and http=%%ne.s.gmane.org%gmane.comp.gnome.apps.gnucash.german if you spea2 German*.

7H )re there other means of obtaining support for GnuCashN

:= 3es. 5any of the de,elopers hang out on icG in the cgnucash discussion on irc.gnome.org. :lso$ there is a .i2i online at http=%%gnomesupport.org%.i2i%inde0.php%GnuCash.

General #nformation
7H Can # run GnuCash on *indo"sN
:= &o$ GnuCash is not de,eloped on )or for* 8indo.s. /f you must run GnuCash from a 8indo.s machine$ your best bet is to use +&C to run GnuCash remotely from a '&/@ ser,er. :nother possibility .ould be to install +58are )....,m.are.com* on your .indo.s machine and run a copy of !inu0 .ithin +58are. 8e donFt ha,e many )anyK* .indo.s de,elopers$ so nobody is really .or2ing hard on a port to .indo.s....

7H # heard it is too hard to compile GnuCashO

:= This .as probably true at the time .hen ".7.0 .as released. /t is no longer true today$ as almost e,ery distribution ships .ith all the necessary libraries )e0cept g-.rap$ .hich means there is in fact >one> e0tra library to be installed before compiling GnuCash*. <o.e,er$ by default$ distributions .onFt install the de,elopment pac2ages of the reGuired libraries$ so you might need to start your distributionFs installer program and tell it to install not only the library pac2ages but also the -de,el pac2ages. /n general$ it .as noted that this problem concerns many applications in the gnome domain$ and this also boils do.n to the fact that there is no such thing as >one monolithic gnome pac2age>.

7H #s there a batch mode 8non6interactive: available for GnuCash2 for building reports2 etcN
:= &o$ for no. GnuCash must be run interacti,ely.

7H Can multiple people access the same datafile in GnuCashN

:= 3ou can ha,e multiple people .ith access to the same datafile$ but they cannot use the data file simultaneously. To setup multi-person access$ all the people must ha,e read%.rite access to the directory containing the file )to read the otherFs created files$ and to create ne. files*. 4ne .ay to do this is by creating a user group and setting the data directory to be o.ned by the shared group and set to mode 2HHE. The F2F ma2es the directory setgid .hich copies the permissions to all files.

7H *hy is GnuCash "ritten in CN

:= The core functionality of GnuCash is .ritten in C$ but do not forget that much of this can be accessed through Guile )scheme*. There are a number of reasons for .hy GnuCash is .ritten in C. The first is historical$ Gnucash .as started in "II7 )or maybe e,en earlierL* and many of the 44# )CQQ$ a,a$ #ython* compilers .ere not yet mature and standariJed enough on the ,ariety of platforms considered at that time$ so C .as the only option at that time. : second reason is because the standard G'/ GnuCash uses is GT?$ .hich is .ritten in C.

7H *hy don+t you re"rite GnuCash in programming language 9yK so that # can contribute easilyN
:= The Guic2 ans.er is >8e .onFt>. The longer ans.er is comple0 but still amounts to >8e .onFt>. GnuCash is a large body of code maintained by a small group of de,elopers .ho are comfortable in C and -cheme )Guile*. :ctually$ D0[ of it is in C and appro0. "3[ is in -cheme%!isp. There is no ,alid reason that .ould 9ustify re.riting this amount of e0isting code in a ne.er language. :lso$ creating language bindings to recent languages such as #ython or ;uby or )insert your fa,ourite language here* is labor intensi,e$ and .eFre already stretched pretty thin maintaining and de,eloping the e0isting code. <a,ing said that$ this is an open source pro9ect and youFre free to do .ith it or contribute .hat you .ant. ust donFt e0pect much support if the reason for your changes is that youFre not .illing to learn C or -cheme. :lso$ GnuCash used to ha,e -8/G bindings )http=%%....s.ig.org* .hich ha,e been used for some perl programming code. :ccording to a list discussion$ these -8/G bindings might still be a .ay to include other languages into GnuCash$ but currently they are unused and unmaintained.

7H # really "ant feature M&P but GnuCash doesn+t have it Ho" do # get it addedN
:= :s2 nicely. =-* 3ou can file an enhancement reGuest at http=%%bugJilla.gnome.org%enter_bug.cgiKproductUGnuCash. #lease bear in mind to describe your proposed enhancement as ,erbosely as possible. The tric2 here is to learn ho. to gi,e the best information to the programmers about .hat your proposed ne. feature should do. /f you .ant to speed up de,elopment significantly$ consider donating some money as described on GnuCashDe,elopment.

7H #s there a "eb interface available for GnuCashN

:= &o

7H Ho" can # provide security for GC data using CF'2 etc :

:= 'nans.ered

7H Ho" can # contribute to the GnuCash proQectN

:= 8eFre .or2ing on a more formal process$ but for no. you should subscribe to the mailing list at http=%%....gnucash.org%cgi-bin%mailman%listinfo%gnucash-user and http=%%....gnucash.org%cgibin%mailman%listinfo%gnucash-de,el and discuss .hat you can contribute .ith the participants on the lists. #lease be a.are that GnuCash is a large body of code .ritten in C and -cheme )see the (:A abo,e$ >8hy is GnuCash .ritten in CK> if you .ant to 2no. .hy*. /f these are languages that you are not .illing to .or2 .ith$ consider contributing in other .ays.

7H # think # found a bug Ho" do # report itN

:= (irst of all$ try to ,erify that it is indeed a bug and that it has not been reported before. -earch the mail list archi,es )see (:A abo,e*. Then search the Gnome 1ugJilla database. /f you feel you ha,e indeed found a bug$ you can then report it at http=%%bugJilla.gnome.org%enter_bug.cgiKproductUGnuCash. #lease bear in mind to report your bug as ,erbosely as possible. The tric2 here is to learn ho. to gi,e the best information to the programmers about ho. to reproduce bugs. : #rogrammer .ill usually only be able to fi0 a bug they can see$ if you canFt ma2e the programmer see your bug$ it .onFt get fi0edL

%sing GnuCash
7H Ho" can # move the transactions from account ) into account (2 thus combining themN
:= :t present$ Gnucash does not offer a .ay to mo,e groups of splits from one account to another. 3ou .ill need to mo,e them one at a time. 4pen the register for account : and select the pulldo.n menu item +ie. -S -tyle -S Transaction ournal to e0pose all the splits. (or e,ery split .here the >:ccount> field sho.s account : reset it to account 1. To do this Guic2ly and safely$ first use "&$')c to copy the destination account name )>account 1 >* to the clipboard. Then highlight each reference to account : by double clic2ing on it and use "&$'). to paste the destination account name. #ressing Enter after each paste silently mo,es the transaction out of the register. 1e carefulL /f you inad,ertently set the >:ccount> field to an unintended location$ you .ill need to search through all your accounts to find the lost transaction to correct your mista2e.

7H #s it possible to merge t"o gnucash filesN

:= :t present this is not possible.

7H Ho" can # save a template of my account structureN

:= This is a,ailable from the menu= (ile -S 60port -S :ccounts

7H *hen # search for customers 8or anything else for that matter:2 ho" can # return a list of everythingN
:= 6nter a search criteria of matches rege0$ and place a single dot >.> in the te0t field area. Then$ clic2 (ind. The regular e0pression >.> means to match anything.

7H Ho" can # record a transaction on different dates 8actual date and bank date:N
:= 3ou record the transaction on the date you .rite the chec2 or initiate the transaction. 8hen it >clears> the ban2$ you can clic2 in the >;econciled> field to >clear> the transaction )change the >n>on-reconciled to >c>leared*.

)ccounting
7H Ho" do # treat ta9esN )s an account payable or as an e9penseN
:= This is a loaded Guestion$ and you should really tal2 to your accountant. <o. you treat ta0es really depends on .hat 2ind of ta0es they are$ and ho. you 8:&T to treat them.. /n some cases they are e0penses$ in some cases they are liabilities.

)ppendi9 C Contributed )ccount Trees

Table of Contents '? +at

%; Iat
:ccount types )only sho.n if different to parent type*

V6W 60pense V/W /ncome V:W :sset V!W !iability VAW 6Guity V1W 1an2 accounts VCW Credit Cards V;W :ccounts ;ecei,able V#W :ccounts #ayable

)1o0 n* refers to +:T form bo0 number )/ actually ha,e these as descriptions to the account to remind me* :dd all the )1o0 n -part* together to get the .hole )1o0 n* The +:T sho.s you liability - if its negati,e they o.e you. Capital 6Guipment )1o0 H - part* and )1o0 7 - part* is the ,alue of all \additions\ )purchases* made o,er the +:T return period - not the absolute ,alue$ nor the difference in ,alue unless that difference is .holly due to ne. purchases. Depreciation$ losses )e.g a .rite off of faulty item* and other reductions in capital ,alue are not included. /f you sell a capital item then that sale and its +:T is recorded under /ncome. The asset is Fcon,erted to cashF$ so the Fnet of +:TF increase in your ban2 account$ .hen the in,oice is payed$ is matched by a decrease in capital. 1an2 :ccounts V1W Z___ 5ain :ccount Z___ ;eser,e :ccount Cash V:W :ssets V:W Z___ Capital 6Guipment )1o0 H - #art* - additions only$ not absolute ,alue Z Z___ Computers Can be depreciated to Jero this year Z Z___ 66C re,erse +:T purchase )1o0 7 - #art* create sub-accounts if needed Z___ 4ther ;ecei,able V;W Customers to .hom you gi,e credit - )business section* Cards VCW Z___ Card " !iabilities V!W Z___ 4.ed Corp Ta0 Z___ 4.ed (ees Z___ 4.ed Ta0 % &/ Z___ 4ther +:T V!W &et )1o0 E* Z___ i%p V:W purchases )1o04* Z___ o%p V!W )1o03*

Z___66C on re,erse +:T purchases )1o0 2* Z___-ales all including Jero rate '?% 66C and 8orld )1o0"* #ayable V#W -uppliers .ho gi,e you credit )business section* 6Guity VAW Z___ Corp Ta0 Z___ DirectorFs !oan Z___ Di,idends Z Z___ Director" Z Z___ Director2 Z Z___ -hareholder " Z___ Grants )and stuff that does not count as income* Z___4pening 1alances /ncome V/W )1o0 7 - part* Z___ /nterest Z___ 5isc Z ___ -ales Z___ 66C Z Z____ goods )1o0 D* )sub accounts as needed* Z Z____ ser,ices includes soft.are )sub accounts as needed* Z ___ '? Z____ 8orld 60penses V6W Z__Depreciation Z__ 6moluments Z Z___ Directors (ees Z Z___ &/ 6mployer Z Z___ 6mployee " Z Z___&/ Z Z___&et -alary Z Z___-ta2eholder Z Z___Ta0 Z___ 4ther &on +:T 60penses Z___ +:T #urchases )1o0 H - part* Z___ :ccountancy Z___ 1an2 Charges Z___ Consumables Z___ 66C re,erse +:T purchases )1o0 7 - #art* Z Z___ goods )1o0 I* )sub accounts as needed* Z Z___ ser,ices includes soft.are )sub accounts as needed* Z___ 4ffice Z___ #hone and /nternet Z___ -oft.are Z___ -ubscriptions Z___ -undry Z___ Tra,el % :ccom

)ppendi9 1 G,% Free 1ocumentation License

+ersion "."$ 5arch 2000 Copyright 2000 (ree -oft.are (oundation$ /nc. (ree -oft.are (oundation$ /nc. EI Temple #lace$

-uite 330$ 1oston$ 5: 02"""-"30H '-: 6,eryone is permitted to copy and distribute ,erbatim copies of this license document$ but changing it is not allo.ed. Table of Contents 0. #;6:51!6 ". :##!/C:1/!/T3 :&D D6(/&/T/4&2. +6;1:T/5 C4#3/&G 3. C4#3/&G /& A':&T/T3 4. 54D/(/C:T/4&E. C451/&/&G D4C'56&T7. C4!!6CT/4&- 4( D4C'56&TH. :GG;6G:T/4& 8/T< /&D6#6&D6&T 84;?D. T;:&-!:T/4& I. T6;5/&:T/4& "0. ('T';6 ;6+/-/4&- 4( T</- !/C6&-6 :ddendum

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