Balance colomns in the chart of accounts

[anasko83]

I have one more question about balance column in the chart of accounts.
What is shown there? I andestand what is shown in the balance total column but balance columns is something!

[suzannemead]

What is shown there is the balance of each account including income & expense accounts from the beginning of the data file rather than any particular period. You will notice that the sub-accounts of assets & liabilities have balances, but not the parent account.

[anasko83]

But why is it so that in the income account we see the sum with "-" and in the expense account - with "+"?

[suzannemead]

This is an indicator of Debits (+) or Credits (-).

[anasko83]

May be my question was incorrect but I ment that if we'll take Invoice - Deb. in the Income acc. then we'll receive some money accourding to this Invoice - once more we have Deb. As a result how does it happen that Deb. +Deb. = Cred.?
Please, tell me why Income have cred. statut.

[suzannemead]

A sale is a credit to whatever sales account you use. If it is another type of income it is also a credit. The money coming in is a debit.
Debits and credits are merely labels in accounting for the left and the right side of an account. Each side has to balance the other. When you create an invoice the sale goes to the credit side or sales account. The charge goes to debit, accounts receivable. When you receive the payment you are putting a credit into accounts receivable and a debit into cash. Assets and Expenses are generally debit accounts. Liabilities and income & equity are generally credit accounts. That way, in double entry bookkeeping, one side of the entry balances the other.

[anasko83]

Many thanks.
Now I understand why it goes in such a way.
You see, in our bookkeeping system everythis works differently.
Even visualy.
In our program we don't make bills and the move of money works a littel bit differently. That is why I'm to learn everythis from the beginning.

[anasko83]

I have one more question about chart of accounts. What for the column "Income Account" is necessary?

[suzannemead]

I only use the Name, Type and Balance columns. That is really all that seems necessary. The Income Account column comes up blank and I really don't know of what use it is.

[Joe Williams]

Conserning Credits and Debits. The way I keep track of them is "Debits INCREASE asset and expense type accounts". This means that Credit increases the other types and I do not have to rember the T-chart!!

[suzannemead]

The "T-chart" - even with everything computerized I still use that to teach or explain to people about accounts It is a good visualization and helps make complex transactions easier to understand.

[lisa_mn]

I just used an old Tchart myself the other day as I was trying to figure out a bunch of money moving in and out of several bank accounts with various checks and deposits. My client says "Oh, is that how you see what's really going on?"

[LauraD]

I use a trick for my slow brain. . .when a transaction affects an asset account (as a bank account, for example), it comes in with the left hand (debit), and goes out with the right hand(credit). . .

Hope someone else finds this visual helpful,

Laura