Difference between revisions of "Concept Guide"
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Revision as of 04:26, 17 August 2010
Contents
Road towards 2.0
This page is just a temporary page to keep track of the progress of the concept guide, as well as what needs to be done with it. Please feel free to add to it, with various thoughts and comments. Especially in things that needs to be clearer, or items that are missing etc.
Check out document
svn checkout http://svn.gnucash.org/repo/gnucash-docs/trunk gnucash-docs
Review
Please read through the svn version of Concept Guide (or from SVN as above) and indicate on this wiki which areas need to be reworked, modified, deleted, added, or left unchanged.
We can use this wiki page to discuss what should be in the guide, and which examples. Later on, we can use the gnucash-devel list to send out the raw text for quick reviews
Updating the concept guide
Please co-ordinate and inform of your intentions on gnucash-devel as well as on this wiki.
- Have a read of the Gnome documentation documents.
- Ensure you have the latest copy from subversion
- svn update
- Update the Wiki, Move the chapter to Ongoing work
- Add revision and your name to the authors block. See sample below
<!--
(Do not remove this comment block.)
Version: 1.9.x
Last modified: April 16th 2006
Version: 1.8.4
Last modified: April 10th 2004
Maintainers:
Chris Lyttle <chris@wilddev.net>
Author:
Jon Lapham <lapham@extracta.com.br>
Updated Bengt Thuree <bengt@thuree.com>
Originally written by Carol Champagne.
Translators:
(translators put your name and email here)
-->
- Modify the xml file, and check the result with yelp
- I am using scite as my editor, a plain editor like gedit, but it can "compress" the various tag pairs. Or use emacs with docbook extension
- yelp gnucash-guide.xml
- The XMLmind XML editor for Windows is free for personal use, and works fine. It also validates as well as clean up the XML code.
- www.xmlmind.com/xmleditor
- For screenshots
- Ensure you are using the default Gnome theme (ClearLooks)
- Make the screenshots as small as possible
- Use GIMP to take the screen shots (Aquire with delay)
- Use Gimp --> Image --> Scale to ensure the width is max 510 pixels.
- Save screenshot as a png file.
- Ensure you are using the standard C locale. LANG=C ./gnucash
- Spell Check the document.
- Clean up docbook tags
- xmllint --valid --noout gnucash-guide.xml
- yelp gnucash-guide.xml
- xmlto -o /tmp txt gnucash-guide.xml
- Prepare a text diff (if new file, or major formatting changes)
## SVN gnucash-guide.xml xmlto -o /tmp txt gnucash-guide.xml rename /tmp/gnucash-guide.txt to /tmp/gnucash-guide.svn.txt ## Modified gnucash-guide.xml xmlto -o /tmp txt gnucash-guide.xml rename /tmp/gnucash-guide.xml to /tmp/gnucash-guide.new.xml diff -u /tmp/gnucash-guide.svn.txt /tmp/gnucash-guide.new.txt
- Prepare an subversion diff
svn diff > MyChanges.diff
- Double check that the svn version has not been modified.
- Submit your contribution to the GnuCash team
- Send the text based diff file to the -devel list (if major formatting changes or new file)
- Send the subversion diff file to -devel (if minor changes)
- Send the xml (if new file or if you did major formatting changes) to -devel
- Send the screenshots directly to Chris, and other interested parties after some time passed to let comments have a chance to filter back.
Areas that need work
The following items have missing text in the existing guide, or just need more work
- Index
- Search
- Bugs
- Scripts
- gnc-fq-check
- gnc-fq-dump
- gnc-fq-helper
- gnc-fq-update
- gnc-test-env
- Chapter 7
- Entering a Payment Schedule
- Monthly Payments (How-To)
- Final Payment (How-To)
- Putting It All Together
- Entering a Payment Schedule
- Chapter 8
- Configuring Finance::Quote
Section 8.6.3.2 says:For stock accounts that have already been setup, edit the account and select the Get On-line Quotes box.
However, there is no "Get On-line Quotes" box in the "edit account" popup. - Downloading historical prices
- 8.6.5 Making Stock Value Reports
Tell how to get the report popup. - Recording Stock Splits and Mergers (How-To)
- Recording Employee Stock Plans (Discussion)
- Stock Options (How-To)
- Reconciling with the Brokerage Statement (How-To)
- Currency trading
- Configuring Finance::Quote
- Chapter 10
- 10.7. Tracking Currency Investments (How-To)
- Appendix A Importing
- A.2 Organization of QIF Files (Discussion)
- A.3 Common Duplication Issues (Discussion)
- A.4 Checking QIF Data (Discussion)
- OFX features
- HBCI
Ready for release
The following chapters have been review/modified and are ready for release
Ready for review
The following chapters have been modified and are ready for review
- 1. Overview
- 3. Accounts
- 4. Transactions
- 5. Checkbook
- 6. Credit Cards
- 7. Loans
- 8. Investments
- 9. Capital Gains
- 10. Multiple Currencies
- 11. Depreciation
- 12. Accounts Receivable
- 13. Accounts Payable
- 14. Payroll
Ongoing work
- Accounts, Chapter 3 Updates
GnuCash Tutorial and Concepts Guide
This document title duplicates the title of the official GnuCash software documentation that currently exists [1] as part of the information available to current and new users of the GnuCash double-entry accounting freeware product.
However, the official document as it exists currently covers features only through version 2.2.[2] The current stable version is 2.2.9 [2], and that is soon to be updated and replaced by the pending version 2.4.
Because the introduction of new features has exceeded the pace at which the documentation has been able to keep current, this page is intended to be a repository for new feature descriptions and instructions how-to-use those features. The intent is to provide easy access for gnucash users to review the proposed documentation with the end result of stamping it approved or identifying shortcomings that need update and correction.
Once that process has resulted in the content reaching a stable point, that portion of the new documentation will be moved into the official GnuCash Tutorial and Concepts Guide.
Since the official Guide is organized by chapters, all entries on this page will reference the place in the current official documentation that is intended as its ultimate destination.
Once integrated into the guide, the content here will be removed and a stub left indicating the date of integration into the official Guide.
The content below is intended to be added to Chapter 3 of the "Guide".
== ENHANCEMENT 1: == Expansion of "Other Assets" in asset descriptions in Guide Chapter 3.
<sect2 id="accts-gc-bsa3">
<title>Expanding Other Assets</title>
<para>This section introduces current and long-term or fixed assets. It
then is followed in other sections by descriptions of many instances of these
assets and the way to record them in your chart of accounts.</para>
<orderedlist>
<listitem>
<para><guilabel>Current Assets</guilabel> are those activities whose
normal expected life would be one year or less. They also are those
assets that are easy, or relatively easy, to convert to cash, which is
the most liquid of all assets. Such activities could be tracking
reimburseable expenses, travel advances, short-term loans to a friend
or family member, prepaid expenses, annual insurance premium amortiza
tion, and so on. The individual entity could have many other kinds
of short term activities that reflect what it is doing. [See below
for descriptions and comments about these items.]</para>
</listitem>
<listitem>
<para><guilabel>Long-term (Fixed) Assets</guilabel> are those
activities whose normal expected life exceeds 1 or more years. They
are fixed (not in the sense that they no longer are broken) because
they are not easily converted to liquid or near-liquid assets. This
grouping covers both tangible and intangible assets. Examples of
tangible assets are land, buildings, and vehicles (cars, trucks,
construction equipment, factory presses, etc.) Intangible assets
include such things as patents, copy rights, goodwill, etc. Because
the lives of some of these assets show wear and tear and deterioration
in value over time, businesses and individuals can allow for that
diminution in value by calculating depreciation on such assets. For
example, land normally does not depreciate, but buildings do, as do
equipment and vehicles. [See below for further informaton about all
these items.]
</para>
</listitem>
</orderedlist>
</sect2>
<sect2 id="accts-gc-bsa4">
<title>CURRENT ASSETS</title>
<para>This section explains short-term receivables, reimburseable expenses,
travel advances, prepaid premiums, prepaid rent, suspense or wash accounts.
</para>
<orderedlist>
<listitem>
<para><guilabel>Short-term Receivables</guilabel> This kind of account
is useful to reflect an agreement made with someone you trust.
Suppose you lent someone $500 and he agreed to repay you $50 a month.
If he paid on time, the loan you made would be paid off within a year,
which is why it is classified as a short-term receivable. So you
could record that loan initially in this account tree: Other Asset>
Current Asset>LoanToJoe. At the time you gave him the money your
entry is debit (increase) LoanToJoe $500 and credit (decrease) Bank
$500. Each time you receive Joe's payment you record $50 debit
(increase) to Bank and credit (decrease) LoanToJoe.</para>
<para>[Note: don't become confused by the use of the word "Loan".
"Loan-To" is the tipoff that you really have a receivable, that is,
you will receive from Joe, the money you previously loaned. Until he
actually pays the money owed you, you reflect his debt in your books
by an account describing your expectation -- you will receive the
money owed you, hence the word "receivable".]</para>
</listitem>
<listitem>
<para><guilabel>Reimburseable Expenses</guilabel> This kind of activity
is one in which you spend your own money on behalf of someone else
(your employer, perhaps) and later you receive repayment of what you
spent. The case might be a business trip. The employer has a policy
of covering (paying for) all expenses that he authorizes. After the
trip is over, the employee submits a report listing dates and amounts
spent with receipts for all the expenditures. The employer reviews
the report and pays for all items that he considers belongs to his
business. [Normally, employees know in advance what the employer will
reimburse, so only those items are recorded as a reimburseable expense
on the employee's books.]</para>
<para>Because a business trip can involve different kinds of expenditures
(air travel, logdging, transportation at the destination, etc.),
different kinds of expenditures would be recorded in the one account
as long as the expenditures all related to the same trip. In other
words, if a second trip is made before the first is fully settled, a
second account for a diffent event could be set up. It would make
sense to do this, if it would help to keep separate all the details of
one trip from those of another. It is up to the person making the
trip to decide how much trouble it would be to put separate trips in
separate accounts or to put them all in the same account.</para>
<para>Recording the expenditures on the trip would be much the same.
That is, if you paid by cash you would debit (increase) the reimburse
able expense account for the money paid in cash and credit (decrease)
the Bank account for the payment made. If the traveler paid by credit
card, the debit side would be the same as just described, but the
credit (here, an increase) would be to the account for the credit card
company.</para>
<para>When you received your reimbursement, then the journal entry to
record receipt of the funds from the employer would be: debit (in
crease) Bank for the check amount; credit (decrease) the reimburseable
expense account for the check amount. If it turns out that the
reimburseable expense account is not zero balance, then it means that
there is a difference between you and the employer in handling the expense,
which difference needs to be investigated. If the balance is a debit
(a positive balance), your account has some money that was not reimbursed.
If the balance is a credit (a negative balance), you were paid for more
than what you recorded as due you. In both of those situations you should
reconcile the difference between what you recorded and what was paid.
That effort should disclose exactly what is causing the discrepancy.
You may need to contact the employer's bookkeeper to know what happened
on that side of the transaction.</para>
<para>In the event the employer refused to reimburse you for an
expenditure, that effectively makes it your expense. In that case, you
would make this entry: debit (increase) your own Expense (appropriate
ly named) and credit (decrease) the Reimburseable Expense account.
That entry should result in a zero balance in the Reimburseable
Expense account. If not, reconcile until you identify the difference.</para>
<para>[Sometimes there are small differences that don't match an individual
entry. In those cases divide the amount by 2 or by 9. If the unresolved
amount is divisible by two, it suggests that both you and the employer
entered the item in the same manner: both as debits or both as credits.
If it is divisible by 9, then likely one of you transposed adjoining
numbers; e.g., one entered 69 and the other entered 96.]</para>
</listitem>
<listitem>
<para><guilabel>Travel Advances</guilabel> These are very similar to
Reimbursable Expenses. The difference is that someone gives you his
money first; you spend it, and then you give a report accounting for
what you spent it on. The report is supported by invoices establishing
who, what, where, when, and how much for each expenditure. In the
Reimburseable Expense case, you spent your money first and later
recovered it.</para>
<para>In this situation you record on your books this entry: debit
(increase) Bank for the travel advance amount (say, $500) received;
credit (increase) short-term liability>Travel Advance ($500). This is
a liability because you are not gifted with the money, but only loaned
it for the purpose of having funds to spend when doint the employer's
business.</para>
<para>Frequently, the way these monetary arrangements work is that at
the beginning of the salesman's employment, he receives the advance
and monthy (or more frequently) turns in a report about who, what,
where, when, and how much he spent. The money in the report is paid
to him in the amount the report asks for, assuming all was approved.
</para>
<para>During the period after receiving the advance and before filing
a request for reimbursement report, he can record his expenditures into
the advance account, the liability account. If he does that, the balance
in the account will show how much of the advance he has not yet spent
(assuming the Travel Advance balance is a credit). If no mistakes have
been made and all expenses are approved, then the sum of the unspent
account balance and the reimbursing check amount will equal the original
travel advance amount.</para>
<para>That he records the travel expenses to this advance account (and
not to his own expense accounts) makes sense, because he is spending
his employer's money for the employer's authorized expenses. He is
not spending his own money for his own books to record as his expenses.
</para>
<para>When he receives the report reimbursement (say, $350), he debits
(increases) Bank, and credits (increases) Travel Advance, assuming
that previously he had been recording expenditures to the travel
advance account. Tracking activity in this manner causes the account
always to show the amount that he owes the employer.</para>
<para>See the Reimburseable Expense discussion above for what to do if
the employer does not accept an item the employee put on the travel
advance reimbursement request report. The difference resolution effort
is essentially the same for both types of accounts.</para>
</listitem>
<listitem>
<para><guilabel>Prepaid Premiums or Prepaid Rent</guilabel> Some types of
expenses are usually billed as semi-annual or annual amounts. For
example, the insurance industry will bill home insurance annually,
while car insurance premiums can be annual or semi-annual. For those
that pay an amount that covers several months or a full year, the
proper accounting treatment is to reflect in each accounting period
the amount that expresses the benefit applying to that period.</para>
<para>In the case of someone who pays a full-year's insurance premium
at the beginning of the insurance period, the entry to record this is
debit (increase) Prepaid Insurance Premium for say, $1200, and credit
(decrease) Bank for $1200.</para>
<para>Then a monthly recurring journal entry (scheduled transaction)
is created that debits (increases) Insurance Expense $100 and credits
(decreases) Prepaid Insurance Premium $100. This technique spreads
the cost over the periods that receive the insurance coverage benefit.
Businesses following generally accepted accounting practices would
normally use this technique, especially if they had to present
financial statements to banks or other lenders. Whether idividuals do
depends on the person and how concerned they are to match cost with
benefit across time periods. Another factor influencing use of this
technique would be the number of such situations the person encounters.
It is relatively easy to remember 1 or two, but more difficult if
having to manage 10 to 20. You would set up as many or as few as proved
useful and important to you.</para>
</listitem>
<listitem>
<para><guilabel>Suspense or Wash Accounts</guilabel> The purpose of
these accounts is to provide a device to track "change of mind" situations.
Say, in the grocery store you see canned vegetables on sale, so you buy
6 cans. When you come home and are putting things in the cupboard you
discover you already had 12 cans. You decide to return the 6 you just
bought. Some persons in this situation would charge (increase) the whole
bill to Grocery Expense; and when they returned the cans, they would
credit (decrease) Grocery Expense. That is one way of handling that.
It works fine if that happens once in awhile.</para>
<para>When there are several persons shopping and at several vendors,
there can be a case where there are several returns happening at once
and in overlapping time frames. In that case the Wash Account is
charged (increased) at time of changing the mind, and either Bank
(decreased) or Credit Card (increased) is credited. When the return
occurs, the reverse happens: Bank is debited (increased) or Credit Card
is debited (decreased) for the cash value of the returned items and the
Wash Account is credited (decreased) in the same ammount.</para>
<para>If the wash account has a non-zero balance, scanning the debit
and credit entries in the account will show the non-matched items.
That is, debits not matched by offsetting credits indicate items
intended to be returned but not yet. The reverse (credits not matched
by offsetting debits) indicates that returns were made but the original
charge was not recorded in the Wash Account. These differences can be
cleared up by returning unreturned items or recording charges (debits)
for items already returned. The mechanics of doing that likely will be
finding the original expense account the item was charged to and making
an entry like: debit Wash Account, credit original expense.</para>
</listitem>
</orderedlist>
</sect2>
<sect2 id="accts-gc-bsa5">
<title>SHORT OR LONG-TERM ASSETS</title>
<para>This section explains why some types of assets may be short or
long term and gives an example.
</para>
<orderedlist>
<listitem>
<para>An example is deposits (e.g., utility, rental, security). If the
deposit agreement contains a provision to recover the deposit at the
end of a year, the treatment could be that of a short-term asset.
However, when the agreement is that the deposit holder returns the
funds only upon successful inspection at the end of the relationship,
then at the start of the relationship or agreement, the person paying
the deposit has to decide whether to write it off as a current expense
or to track it for eventual recovery at the end of the agreement
(usually, moving to a new location).</para>
<para>Whichever decision is made, the accounting treatment is to debit
(increase) expense [assuming the write-off decison] or debit (increase)
Deposts Receivable [assuming the intent is to recover the deposit in
the future] and credit (decrease) Bank for the amount of the deposit.
</para>
</listitem>
</orderedlist>
</sect2>
<sect2 id="accts-gc-bsa6">
<title>LONG-TERM (FIXED) ASSETS</title>
<para>This section illustrates long-term assets by a discussion of land,
buildings, leasehold improvements, intangibles, vehicles and other
equipment.</para>
<orderedlist>
<listitem>
<para><guilabel>Land</guilabel> is not a wasting asset. That is, it
does not get used up over time. For that reason, it usually is recorded
at cost at the time of purchase. Appreciation in its value over decades
is not recorded and is not recognized in any way on the books of the owner.
It is only after land has been sold that sale price and purchase cost are
compared to calculate gain or loss on sale.</para>
<para>Land is frequently sold/purchased in combination with structures
upon it. That means that the cost has to become separated from the
cost of structures on it. Land valuation is usually part of the trans-
fer of ownership process and its value is shown on the purchase documents
separately from that of the structures on it.</para>
<para>Land values shown on purchase documents frequently arise from the
process of value determination managed by assessors whose job it is
to assign values to land for tax purposes. Local and regional areas of
a state or province use the values determined by assessors in their tax
formulas, which provide revenues for local and regional governing
authorities to finance their required community services.</para>
<para>Should land be acquired in a situation not subject to a history of
land valuation by a formal valuation system, then the purchaser can appeal
to real estate agents and an examination of recent sale transactions for
information that would allow calculating a reasonable amount to express
the value of the land.</para>
</listitem>
<listitem>
<para><guilabel>Buildings</guilabel> are the man-made "caves" in which
much of life's human interaction occurs. These structures are wasting
assets, because in their use they or their components gradually wear.
Over time they begin to lose some of their function and they can suffer
damage due to the elements or human action.</para>
<para>Accepted accounting practice is to record the cost of the building
determined at time of ownership transfer (purchase) or at conclusion of all
costs of construction. Because buildings are frequently used for decades,
and due to the need to be able to calculate gain or loss on sale,
accounting practice preserves the original cost by not recording declines
in value in the account containing the original purchase or construction
cost.</para>
<para>Instead, the depreciation technique is used to show [in the
balance sheet] the structure's net book value [original cost reduced by
accumulated depreciation]. Depreciation is a separate topic treated
elsewhere in this Guide.</para>
</listitem>
<listitem>
<para><guilabel>Leasehold Improvements</guilabel> Where a business does
not own the building where it does business, and instead has a long-term
lease, it is not uncommon for the business tenant to make improvements to
the premises so that the structure obtains both function and appearance
that enhances conducting its business activities.</para>
<para>In these cases, the expenditures that the business incurs are recorded
in a Leasehold Improvements account: increase (debit) Leasehold Improvements,
decrease (credit) Bank or increase (credit) a suitable liability account
[which could be a liability to a contractor or a bank or a credit card,
etc.].</para>
</listitem>
<listitem>
<para><guilabel>Vehicles or Equipment</guilabel> of all kinds usually
last for several years, but their useful lives are much shorter than
that of assets that have little movement in their functioning. Because
they do wear out over time, common accounting practice in business is
to record depreciation using life spans and depreciation methods
appropriate to the nature and use of the asset. Frequently, the life
and depreciation methods chosen are influenced by what is permitted per
tax regulations for the kind of asset being depreciated.</para>
<para>While depreciation usually is used by businesses, individuals can
do so as well depending on being recognized as able by taxing authorities;
or if their personal wealth is so large that it is necessary to employ
accountants to track and manage their holdings to take advantage of tax
benefits permitted by law.</para>
</listitem>
<listitem>
<para><guilabel>Intangibles</guilabel> The mechanics of accounting (debiting
and crediting appropriate accounts) for these assets are relatively simple,
much the same as for any of the above assets. Where the difficulty lies
is in their valuation, which is an advanced topic and not something that
individual persons and small businesses would likely encounter. For that
reason further discussion of items such as patents, copyrights, goodwill,
etc. are left for an advanced accounting discussion. [You can request
such a discussion by contacting the Gnucash developers list
(gnucash-devel@gnucash.org).]
</para>
</listitem>
</orderedlist>
</sect2>
Remaining work
The chapters below have not been modified/checked since the 1.8 series.
General
- Add screenshots for the budget chapter
Personal
Business
Appendix
- A. Migration Guide
- B. Frequent Asked Questions (we need to update with the valid FQA)
Thoughts and comments
- Reports -
- Add a sub chapter in each chapter regarding to Reports valid to current chapter
- Add a separate chapter with an overview of the current reports
- Make examples with separate accounts for each stocks/brokearage income/expense, so we can track each stocks costs
- Ensure the account structure and names follow the default convention (Change "Starting Values" to "Opening Balances" for instance)
- One datafile per chapter, and the chapter has to explain how to create the datafile with all its entries.
- If you have multiple bank accounts with one bank the following should be an example?
- Asset:Bank:CitiBank:Saving
- Asset:Bank:CitiBank:ATM
- Multiple currencies
- the business features are all currently single-currency reference
- Equity:Opening Balance:USD
- Equity:Opening Balance:AUD
- Income:Saving:CitiBank:Interest (where CitiBank is all in USD)
- Expenses:Bank:CitiBank:Interest (where CitiBank is all in USD)
- Expenses:Bank:CitiBank:Charges (where CitiBank is all in USD)
- Income:Saving:Boom:Interest:HKD (boom has one USD and one HKD account)
- Income:Saving:Boom:Interest:USD (boom has one USD and one HKD account)
- Investments
- Verify Capital Gains/Dividens in reports. Details
- When you create a commodity, you should also directly create the Dividend account
- How to Add / Remove shares
- How to move shares between brokerage accounts.
- How to do imediate re-invest dividend
- How to buy shares with NON-Default currency
- Current workaround: Buy the shares from the BANK account, and right click on the stock purchase row and select "Edit Exchange Rate"
Default currency AUD (not HKD)
Commodity Stock_1
Assets:Banks:Boom:HKD
Assets:Brokerage Accounts:Boom:Stock_1
Expenses:Investments:Commission:Boom_HKD
Income:Investments:Dividend:Boom_HKD:Stock_1
Open Assets:Banks:Boom:HKD account
Buy Stocks
Assets:Banks:Boom:HKD Withdrawal 10,000
Expenses:Investments:Commission:Boom_HKD Deposit 500
Assets:Brokerage Accounts:Boom:Stock_1 Deposit 9,500
Right click on the last row, and select "Edit Exchange Data"
In the following pop up window, enter the actual number of stocks in the last entry box
(not the default entry box)
- Assets
- Personal loan to a friend (Assets:Money owed to you:<Friends name>)
- Good example here
- Depreciation of private assets like Car and other items (house, horse etc)
- Personal loan to a friend (Assets:Money owed to you:<Friends name>)
- QIF Import
- Migrating from Quicken/Money
- I think we need to come with more details on this area? (expand on 2.7. Importing QIF Files, and Appendix A)
- Ensure that the numbers in the QIF file do not contain " " (http://bugzilla.gnome.org/show_bug.cgi?id=121443)
- Sample of QIF file, and links to more samples
- Migrating from Quicken/Money
