In Finances accounts are categorized into 5 different groups: Assets, Liabilities, Income, Expenses, Equity.
- Assets represent the money you have (e.g. cash).
- Liabilities is what you owe somebody (e.g. credit card).
- Income accounts are where you get money from (e.g. salary).
- Expenses accounts are where you spend money for (e.g. food).
- Equity represents the value of something (e.g. existing assets).
Finances shows the balances for the Assets, Liabilities and Equity accounts in the accounts view. Balances for Income and Expense accounts are not shown because they don’t make sense. For Income and Expense accounts only the total over a period of time is useful, which is shown in the statistics.
The account balances in an empty journal is zero, because you don’t have any transactions yet. The first thing to do is to set the opening balance of your accounts. For example if you have 45 in cash and $1.200 in your checking account, the Assets:Cash and Assets:Bank accounts should have the same balances. For this case you create the following opening entry.
2017-01-01 Opening Balance Assets:Cash $45 Assets:Bank $1.200 Equity:Opening Balance -$1.245
As you can the money for the opening balance comes from the Equity:Opening Balances account. The account balances are now as follows.
Account Balances ---------------- Assets:Cash $45 Assets:Bank $1.200