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I have just started using GNU Cash and most accounts I have been able to set up without any major issues. But have a query on how can we reverse columns for some entries?

Let me start with a couple of examples.

  1. I have an amount I got as refund. So in bank it shows under Deposit column which is correct as amount has been deposited to my bank. But now I select the account for which it is (it is for Asset > ABC Refund Account). So when I select that account the amount deposited does show up on ABC Refund Account but it shows under Decrease column. The problem is that it should increase the amount not decrease.

  2. I created a new account under Assets > Coins. Now I added opening balance 10. It shows under Increase column but balance shows as negative in red (10). Again its issue with wrong interpretation

  3. I created one more account Assets > House. Now I bought a new house and paid say 5000. So from bank it shows amount Withdrawal 5000 which is correct. But under House it shows 5000 under Decrease column! It should come under increase because I now have that asset with 5000 value so in books it should show that its an asset of 5000. But when I generate the Balance Sheet too, the asset shows up as Liability with 5000 liability!

Is anyone aware on how we can swap the amounts for individual columns as right now many columns look swapped.

Thanks in advance for the help.

1 Answer 1

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In a balanced transaction, the sum of the debits must equal the sum of the credits.

In your Case 1, it appears that you did a transaction across two accounts of type Asset, the bank account and the ABC Refund Account. Since one must be debited and one must be credited, it's impossible for both of them to increase simultaneously from one transaction.

<< The answer below here has been extensively edited after new information was provided in comments>>

When you pay Income Tax Instalments before you receive an official tax assessment (tax bill) you are entitled to count those instalments as an asset. In effect, your money is being held by the Tax Department - which is analogous to your money being held by your bank. So your money in your bank account and your money sitting with the Tax Department are both asset accounts in your accounting system.

When the Tax Department gives you an official bill, most of your prepaid instalments will be used to pay the tax bill. If there were excess prepayments, that money will come back to you as a "tax refund". However, this is not new money - it was your money (your asset) all along.

What's happening when you bank the refund cheque from the Tax Department (or if they do a funds transfer direct to your bank) is that money is passing from one of your asset accounts into another of your asset accounts. You didn't get any richer, but your money (held by someone else) was returned to your bank account. That's why the "Prepaid Tax Instalments account" (which would be a more accurate name than "ABC Refund") balance reduces at the same time as your bank account balance increases.

For your case 3, I think that you have a faulty understanding of debits and credits. A debit will increase the value of an asset account, and a credit will decrease it. Your transaction to purchase the house involved a $5000 credit to your bank account but it shows as a $5000 "withdrawal" because somewhere in your GnuCash settings it says to use "deposit/withdrawal" instead of "debit/credit" for bank accounts. The other side of the purchase transaction was to debit (increase) the value of the house asset account by $5000. GnuCash is correctly showing a debit value in the house account - but I believe that you are interpreting that debit value incorrectly.

I've made the same mistake myself in the past. The statements from my bank showed my deposits as a credit, when I should regard the same deposits as a debit in my accounts. But you have to remember that the bank's accounts are not your accounts. While you (correctly) consider the money in your account at the bank as an asset, the bank considers your deposit account to be a liability because it represents the amount that the bank owes to you.

So I think that GnuCash is correctly showing the situation for Case 3. I don't have enough information about Case 2 with your coins to give you a definitive answer, but I suspect that the same thing is happening. If you reconsider the coin transactions knowing that a debit transaction increases the value of an asset, the GnuCash information may make more sense.

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  • Greetings, Thank you for your answer.
    – PHnSe
    Sep 9, 2023 at 8:30
  • Greetings, Thank you for your answer. 1. For point 1, yes but Refund is Income Tax Refund so it has to be treated as an asset. So for example we pay 1000$ as tax in advance and then at the end of the year if the total tax is 900 then the income tax department gives refund, so that 100 has to be treated as asset increased. 2. For case 2 : I have Coins. Its value in asset on 1st day of accounting year is $100. Now if I show that under Credit, yet on the right Balance column it says (100) in red - which means negative balance.
    – PHnSe
    Sep 9, 2023 at 8:36
  • 3. House purchase, the amount decreases from bank, but in Asset > house, the amount shows in Debit column. Instead of increase. When we buy a house, its an asset and its value should increase. But it shows under Debit column and that means its a liability rather than asset. Its easy to test - you can create a new Asset > House 1. Then create a Bank Account say Savings Bank 1. Now create an entry - Amount $5000 given towards House 1. Now see the effect in House 1. It will show under Debit column rather than Credit. The entry should come under Credit. That way it means we purchase an asset.
    – PHnSe
    Sep 9, 2023 at 8:39
  • I've amended my answer in response to further information in these comments. Sep 9, 2023 at 16:48
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    Thanks for your detailed answer. I will reanalyze and get back, because I think how GNUCash works compared to our manual systems may be a bit different. Right now for Coins, the opening balance was showing as Credit. I changed that to Debit. Now coin shows as Asset with Positive Balance(which is what I want). House I found an issue that while creating account type was set to Liability instead of Asset. I changed that and though the column names are not what I want, finally it shows up under Asset. Thank you once again for the help.
    – PHnSe
    Sep 11, 2023 at 9:50

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