* Craig Earls <[email protected]> [2011-09-24 09:37]: > This is a basic question that I want to sort out for the > documentation. I am writing a section on suggested account > structure. In my (admittedly naive) personal journal I use Assets, > Expenses, Liabilities, and Income at the top level. My > 401K/IRA/Brokerage Accounts are all tracked under the "Assets" > branch. The documentation for "hledger" suggests five top level > accounts, the four I have plus "Equity". Is there a fundamental > difference between "Equity" and "Assets"?
Yes. Assets are the actual things you have (a house, shares, etc). Equity is what actually belongs to you. Just because you have a $200k house (assets) doesn't mean you owe it - you might also have a $200k loan (i.e. liabilites). This is much different to a $200k house (assets) without a loan (liabilities) and therefore $200k in equity. During the year, you wouldn't use the Equity account. You'd use Income and Expenses instead. But when you close the book at the end of the year, assuming your Income is higher that your Expenses, then your Equity would grow (i.e. at the end of the year, your set all Expenses and Income to 0 and increase/decrease Equity accordingly.) BTW, I recommend this quick guide on book keeping: http://www.dwmbeancounter.com/tutorial/Tutorial.html -- Martin Michlmayr http://www.cyrius.com/
