Accounting Basics - Revision history

Mkille at 23:53, 19 April 2013

2013-04-19T23:53:36Z

2013-04-19T23:52:38Z

2007-12-16T16:14:39Z

Some transaction examples: correcting typos

2007-12-16T16:12:02Z

The five types of accounts

2007-04-11T13:36:37Z

Reverted edits by Hz3I3g (Talk); changed back to last version by Matteo

2007-04-11T10:32:18Z

2006-11-06T20:58:59Z

External Links: GnuCash link

2006-06-19T15:45:56Z

corrected math

2006-06-19T07:49:37Z

Accrual accounting example

2006-04-19T19:51:04Z

Some transaction examples

← Older revision		Revision as of 23:53, 19 April 2013
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−	This page was last updated in 2007. It is outdated. Please talk to Operations for info about how we do our accounting. -- [[User:Mkille\|Mkille]] 23:52, 19 April 2013 (UTC)	+	'''This page was last updated in 2007. It is outdated. Please talk to Operations for info about how we do our accounting. -- [[User:Mkille\|Mkille]] 23:52, 19 April 2013 (UTC)'''

	Each organization has its own spin on keeping track of its money. This page shows how we do it at Free Geek.		Each organization has its own spin on keeping track of its money. This page shows how we do it at Free Geek.

← Older revision		Revision as of 23:52, 19 April 2013
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		+	This page was last updated in 2007. It is outdated. Please talk to Operations for info about how we do our accounting. -- [[User:Mkille\|Mkille]] 23:52, 19 April 2013 (UTC)
		+
	Each organization has its own spin on keeping track of its money. This page shows how we do it at Free Geek.		Each organization has its own spin on keeping track of its money. This page shows how we do it at Free Geek.

@@ Line 59: / Line 59: @@
 ; Thrift store sales
 : Say someone buys a video card in the thrift store for $5.00. How would that be recorded?
-: A transaction would be entered that shows $15.00 coming from an '''income''' account (15.00 from "Retail Sales") and going into an '''asset''' account (15.00 to "Thrift Store Till").
+: A transaction would be entered that shows $5.00 coming from an '''income''' account (5.00 from "Retail Sales") and going into an '''asset''' account (5.00 to "Thrift Store Till").
 == Assets and Liabilites ==

@@ Line 12: / Line 12: @@
 == The five types of accounts ==
-There are five types of accounts needed double entry accrual accounting, and they are ''income'', ''expense'', ''asset'', ''liability'', and ''equity''. Every type of account has to fall in one of those five categories. Here are their definitions with examples:
+There are five types of accounts needed double entry accrual accounting, and they are ''income'', ''expense'', ''asset'', ''liability'', and ''equity'' (or ''capital''). Every type of account has to fall in one of those five categories. Here are their definitions with examples:
 ; Income
@@ Line 48: / Line 48: @@
 :* Unpaid loans
-; Equity
+; Equity or Capital
-: Equity accounts are the hardest to explain. Equity is the difference between assets and liabilities.
+: In a for profit business, equity or capital is the money that the owner puts in. It's their ownership stake. Equity can also be described as the difference between assets and liabilities.
 : For reading many reports, you don't need to understand what equity accounts are, so don't worry about it at this point.

@@ Line 55: / Line 55: @@
 ; Payroll advance to staff member
 : Say a staff member needs an advance of $100 to hold them until the end of the month. In what kind of accounts is this tracked?
-: From Free Geek's point of view this is an '''asset''', because once we've handed the $100 over to the staff member, we are owed money. If we write the staff member a check, we would record a transaction where money comes out of the checking account (a reduction in one asset) and goes into an account called '''advances''' (an increase in another asset). The fact that -100.00 goes into one account and  100.00 goes into another means that the transaction is ''balanced''.
+: From Free Geek's point of view this is an '''asset''', because once we've handed the $100 over to the staff member, we are owed money. If we write the staff member a check, we would record a transaction where money comes out of the checking account (a reduction in one asset) and goes into an account called '''advances''' (an increase in another asset). The fact that -100.00 goes into one account and +100.00 goes into another means that the transaction is ''balanced''.
 ; Thrift store sales

@@ Line 155: / Line 155: @@
 * http://www.dwmbeancounter.com/tutorial/lesson06.html
 * http://www.toolkit.cch.com/text/P06_1324.asp
-* http://www.gnucash.org/docs/C/gnucash-guide/types1.html
+* http://www.gnucash.org/docs/v1.8/C/gnucash-guide/ (GnuCash Tutorial and Concepts Guide for v1.8)
 * http://www.unusualresearch.com/accounting/accounting.htm
 [[Category: Accounting]][[Category: Finances]][[Category: C7]]

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 With accrual accounting that looks like this:
   Income:
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 ,500
-  LOSS: 4,500
+  LOSS: 5,500
-You can see that the amount of loss is $2,000 greater in the second scenario, because it takes into account the monitor processing fees, but it is the more accurate number. It's pretty clear that under this scenario, we'd need to cut around $4,500 dollars per month in expenses or come up with additional income to break even.
+You can see that the amount of loss is $3,000 greater in the second scenario, because it takes into account the monitor processing fees, but it is the more accurate number. It's pretty clear that under this scenario, we'd need to cut around $5,500 dollars per month in expenses or come up with additional income to break even.
 == Cash flow ==

← Older revision		Revision as of 07:49, 19 June 2006
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	With accrual accounting that looks like this:		With accrual accounting that looks like this:
		+	:(Note: there's a math error here, needs to be fixed. But unsure of proper method.)

	Income:		Income: