3E-Accountng-101

8/12/2019 3E-Accountng-101

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IEEE Region1 2012 Winter Workshop

Accounting 101

Double Entry Bookkeeping

&GnuCash

Al ReinhartWorcester County Section( [email protected] )

mailto:[email protected]

mailto:[email protected]

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Accounting 101 !nuCash

Account "ypes

#ou$le Entry %ookkeeping

"ransactions

!nuCash

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The 5 Basic Accounts

%asic accounting rules group all &inance relate' things into &un'aental types o& *accounts+

E,erything that accounting 'eals -ith can $e place' into one o& these

accounts

/ Assets things you o-n/ Liabilities things you o-e/ Equity o,erall net -orth/ Income increases the ,alue o& your accounts/ Expenses 'ecreases the ,alue o& your accounts

It is possi$le to categorie e,erything in your &inancial -orl' into these groups

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#ou$le Entry %ookkeeping ( Principle of Balance )

"he accounting euation is the ,ery heart o& a double entry accountingsystem

Assets 5 6ia$ilities 4 Euity : (Incoe ; E9penses)

For every cange in value of one account in te Accounting Equation!tere must be a balancing cange in anoter"

#is concept is $no%n as te Principle of Balance

&ou %ill al%ays be concerned %it at least ' accounts!ecessary to $eep te accounting equation balanced

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#e$it < Cre'it( 6e&t Si'e < Right Si'e )

%alancing changes (or trans&ers o& oney) aong accounts is 'one $y'e$iting one account an' siultaneously cre'iting another

Accounting debits an' credits 'o not ean *'ecrease+ an' *increase+

#e$its an' Cre'itseach increase certain types o& accounts an' 'ecrease others

In asset an' e9pense accounts8'e$its increase the $alance an' cre'its 'ecrease the $alance

In lia$ility8 euity an' incoe accounts8'e$its 'ecrease the $alance an' cre'its increase the $alance

#e$its are al-ays on the *le&t si'e+8 cre'its are al-ays on the *right+ si'e

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Accounts

An account keeps track o& -hat you o-n8 o-e8 spen' or recei,e

Each account can contain any su$5accountsup to an ar$itrary nu$er o& le,els

Soe accounts5 track the acti,ity &or that *real+ account5 in&or you o& its status.

i.e. checking accounts8 sa,ings accounts8 cre'it car' accounts

=ther accounts

are use' to categorie the oney you recei,e or spen'5 these are not accounts that recei,e stateents5 they allo- you to 'eterine ho- uch oney is $eing spent

or recei,e' in each o& these areas

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"ransactions

A transaction represents the o,eent o& oney aong accounts

Whene,er you spen' or recei,e oney8 or trans&er oney $et-een accounts8 that is a transaction

In 'ou$le entry accounting8 transactions al-ays in,ol,e at least t-o accounts

5 a source account5 a 'estination account

A transaction can $e a copoun' transaction

A copoun' transaction in,ol,es ore than t-o accounts

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Accounts

"here is no ipose'8 speci&ic account tree layout (chart o& accounts)7ou 'esign your account structure in any anner you -ish

All accounting is $ase' on the $asic account types Assets8 6ia$ilities8 Euity8 Incoe8 an' E9penses

Accounts types are 'i,i'e into 2 groups5 %alance Sheet accounts (Assets8 6ia$ilities8 Euity)5 Incoe an' E9pense Stateent accounts (Incoe8 E9penses)

Accounting Euation Assets 5 6ia$ilities 4 Euity : (Incoe ; E9penses)

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%alance Sheet Accounts

Balance eet Accounts* are Assets8 6ia$ilities8 an' Euity5 are use' to track the changes in ,alue o& things you o-n or o-e

Assets is the group o& things that you o-n8 that ha,e ,alue5 Anything that has con,erti$le ,alue5 What you theoretically coul' sell &or cash

6ia$ilities is the group o& things on -hich you o-e oney Anything -hich you ust pay $ack at soe tie

Euity is the sae as >net -orth>5 What is le&t o,er a&ter you su$tract your lia$ilities &ro your assets5 "he portion o& your assets that you o-n outright8 -ithout any 'e$t

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%alance Sheet

Assets 6ia$ilities ( What has ,alue ) ( What you o-e )

Euity ( What you o-n )

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Incoe an' E9pense Accounts

Incoe an' E9pense Accountsare use' to increase or 'ecrease the ,alue o& your accounts

%alance Sheet accounts

siply trac$ the ,alue o& the things you o-n or o-eIncoe an' E9pense accountsallo- you to cange the ,alue o& these accounts

Incoe is the payent you recei,eWill al-ays increase the ,alue o& your Assets an' thus your Euity

E9pense is oney you spen' to purchase goo's or ser,icesE9penses -ill al-ays 'ecrease your Euity5 I& you pay &or the e9pense ie'iately8

you -ill 'ecrease your Assets5 I& you pay &or the e9pense on cre'it8

you -ill increase your 6ia$ilities

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Incoe < E9pense Stateent( ?ro&it an' 6oss Stateent )

Incoeun's you recei,e

E9pensesun's you spen'

?ro&it < Surplus or 6oss (Incoe inus E9penses)

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Account "ype ; #e$it < Cre'it

Asset accountsdebits increase account $alancescredits decrease account $alances

6ia$ility accounts

debits decrease account balancescredits increase account $alances

Euity accounts8debits 'ecrease account $alancescredits increase account $alances

Incoe accounts

debits 'ecrease account $alancescredits increase account $alances

E9pense accountsdebits increase account $alancescredits 'ecrease account $alances

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"ransactions

Accounts are the &rae-ork an' structure o& a chart o& accounts

"ransactions are the 'ata -hich &ills each account

A transaction is an e9change $et-een at least 2 accounts.

A single transaction ust al-ays consist o& at least t-o parts5 a from account 5 a to account

"he from account is passing ,alue to the to account

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Suary

i,e account types Assets8 6ia$ilities8 Euity8 Incoe8 E9pense

All accounts ha,e a #e$it Si'e an' a Cre'it Si'e

#e$it Si'e is the 6e&t Si'e (6e&t Colun)Cre'it Si'e is the Right Si'e (Right Colun)

Asset an' E9pense Accounts#e$its increase8 Cre'its 'ecrease

6ia$ility8 Euity8 an' Incoe Accounts

#e$its 'ecrease8 Cre'its increase

"ransactions ('ou$le entry $ookkeeping)Ro$ ?eter8 ?ay ?aul8 usti&y it

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!nuCash A &ree8 -ell supporte' open source accounting so&t-are prograthat ipleents a 'ou$le5entry $ookkeeping syste

!nuCash is5 a personal an' sall5$usiness &inancial5accounting so&t-are5 &reely license' un'er the !3B !?6

5 a,aila$le &or!3B<6inu98 %S#8 Solaris8 ac =S D an' icroso&t Win'o-s

!nuCash -e$site !nuCash.org5 #ocuentation

5 elp anual (1FG pages)a uick re&erence on ho- to use !nuCash

5 "utorial an' Concepts !ui'e (21H pages)5 an in 'epth gui'e to the concepts $ehin' using !nuCash 5 a tutorial to sho- ho- to put those concepts into practice

5 Support Wikis8 ailing lists8 IRC

!nuCash ten's to hi'e the 'ou$le in 'ou$le5entry $ookkeeping

3E-Accountng-101

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