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  Author:
  		Jon Lapham <lapham@extracta.com.br>
   	Updated	Bengt Thuree <bengt@thuree.com>
 Originally written by Carol Champagne.
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<chapter id="chapter_cbook">
  <title>Checkbook</title>

  <para>This chapter will give you all the specific information you need to
  manage your checkbook with GnuCash. Managing your checkbook register is the
  first step of tracking your finances, and GnuCash makes it much easier to
  manage than the traditional paper register does.</para>

  <para>For one thing, as discussed in <xref linkend="chapter_txns"></xref>, 
  data entry of common
  transactions is practically done for you in GnuCash, because of its
  auto-completion feature. GnuCash keeps a running balance of each account,
  and it makes reconciling these accounts easy. And the double-entry method
  helps you account for your spending by requiring a transfer account for
  withdrawals, so you can easily find out how much money you spend in
  different areas.</para>

  <para>Once you are comfortable with using GnuCash for your checking and
  other bank accounts, you may wish to continue on with tracking other
  financial accounts. Chapters 6 through 9 examine methods to manage your
  other accounts.</para>

  <sect1 id="cbook-accounts1">
    <title>Setting up Accounts</title>

    <para>The first step in managing your checkbook is to set up the necessary
    accounts. You can either use the default GnuCash accounts or set up your
    own. For more detail on how to set up a new account, refer to 
    <xref linkend="accts-examples-toplevel2"></xref>.
    For instructions on importing your accounts from another program, refer to
    <xref linkend="basics-import1"></xref>.</para>

    <para>Let's start with the bank accounts you'll need. You need one GnuCash
    bank type account for each physical bank account you wish to track. If you
    are setting up your own accounts or using the default GnuCash accounts,
    make sure that you have an opening balance transaction for each bank
    account you own. The easiest way to get this number is to use the balance
    from your last bank statement as your opening balance. You can enter this
    in the account information window automatically as part of the
    <guilabel>New Account Hierarchy Setup</guilabel> druid, or you can enter a
    manual transaction directly in the account. To enter the transaction
    manually, enter a transfer from an <guilabel>Opening Balances</guilabel>
    account (type equity) to the bank account.</para>

    <para>The typical bank accounts you might track include:</para>

    <itemizedlist>
      <listitem>
        <para>Checking - any institutional account that provides check-writing
        privileges.</para>
      </listitem>

      <listitem>
        <para>Savings - an interest-bearing institutional account usually used
        to hold money for a longer term than checking accounts.</para>
      </listitem>
    </itemizedlist>

    <para>Common transactions that affect these bank accounts are payments and
    deposits. <emphasis>Payments</emphasis> are transfers of money out of the
    bank account, usually to an expense account. <emphasis>Deposits</emphasis>
    are transfers of money into the bank account, usually from an income
    account. You will need to set up income and expense accounts to track
    where that money comes from and where it goes. Remember that a balanced
    transaction requires a transfer of an equal sum of money from at least one
    account to at least one other account. So if you deposit money in your
    checking account, you must also enter the account that money comes from.
    If you pay a bill from your checking account, you must also enter the
    account where that money goes.</para>
  </sect1>

  <sect1 id="cbook-deposits1">
    <title>Entering Deposits</title>

    <para>Most deposit transactions are entered as a transfer from an income
    account to a bank account. Income may come from many sources, and it's a
    good idea to set up a separate income type account for each different
    source. For example, your income may come mainly from your paychecks, but
    you may also receive interest on your savings. In this case, you should
    have one income account for salary and another income account for interest
    income.</para>

    <tip>
      <para>Be sure to check the Tax-Related box in the Account Information
      Dialog when you set up taxable income accounts. Some types of income,
      such as gift income, may not be considered taxable, so check the
      appropriate tax rules to determine what is taxable. For ways to track
      capital gains income, refer to <xref linkend="chapter_capgain"></xref>.</para>
    </tip>

    <para>Before you start entering paycheck deposits, decide how much detail
    you want to track. The basic level of detail is to enter your net pay,
    just like you would in your paper register. This is easiest, but you can
    get even more information out of GnuCash if you enter your gross pay with
    deductions. It takes a bit more effort to enter the deductions, but
    entering your tax withholding information throughout the year allows you
    to run useful tax status reports in GnuCash at any time. These reports can
    help you determine whether you are withholding enough tax, and they can
    help you estimate your tax bill ahead of time. If you are unsure about the
    level of detail, start by entering net pay. You can always go back and
    edit your transactions later if you decide you want more detail.</para>
  </sect1>

  <sect1 id="cbook-withdrawals1">
    <title>Entering Withdrawals</title>

    <para>When you withdraw money from your bank account, for whatever reason,
    you are transferring money from your bank account to some other location.
    In GnuCash, this other location is tracked as an account. The more
    detailed accounts you create and use for your spending, the more
    information you will get about where your money goes.</para>

    <para>Withdrawals take many forms. ATM withdrawals are one of the most
    common transactions. Writing checks is one way to withdraw money to pay
    bills, to buy purchases, or to give to charity. Depending on your bank,
    you might also have service charges, where the bank withdraws the money
    from your account. Transfers of money out to another account are also
    withdrawals. We will take a look at each of these types of withdrawals and
    how to record them in GnuCash.</para>

    <sect2 id="cbook-atm2">
      <title>ATM/Cash Withdrawals</title>

      <para>Cash withdrawals are handled as a transfer from a bank account to
      a cash account. GnuCash provides special <emphasis>Cash</emphasis> type
      accounts for tracking your cash purchases, so you should set up a cash
      account to record your ATM and other cash withdrawals.</para>

      <para>Cash accounts can be used for different levels of detail. On a
      basic level of detail, you simply transfer money to it from your
      checking account. That tells you how much money you took out of checking
      on a given day, but it doesn't tell you where that cash was spent. With
      a little more effort, you can use the cash account to record your cash
      purchases as well, so that you can see where that cash went. You record
      these purchases as a transfer from the cash account to expense
      accounts.</para>

      <para>Some people record every cash purchase, but this takes a lot of
      work. An easier way is to record the purchases for which you have
      receipts, but then adjust the balance of the account to match what is in
      your wallet.</para>

      <para>It's a good idea to at least set up a cash account for your
      withdrawals. Then if you decide to track where your cash goes, you can
      enter transactions for the money you spend. You determine what level of
      detail you want to use.</para>
    </sect2>
  </sect1>

  <sect1 id="cbook-reconacct1">
    <title>Reconciling Your Accounts</title>

    <para>GnuCash makes reconciliation of your bank account with your monthly
    bank statement much easier. <xref linkend="txns-reconcile1"></xref> 
    gives instructions on how to
    reconcile your transactions with the monthly bank statement. This is the
    main reconciliation task that should be done every month.</para>

    <para>But what about all those other accounts you created? Should those be
    reconciled too? If you receive a statement for the account, then you
    should consider reconciling that account. Examples include the checking
    account statement, the savings account statement, and the credit card
    statement. Credit card statements and credit card transactions are covered
    in the <xref linkend="chapter_cc"></xref>, so if you are interested in 
    tracking your credit cards in GnuCash, take a look at the instructions 
    provided there.</para>

    <para>Income and expense accounts are usually not reconciled, because
    there is no statement to check them against. You also don't need to
    reconcile cash accounts, for the same reason. With a cash account, though,
    you might want to adjust the balance every once in a while, so that your
    actual cash on hand matches the balance in your cash account. Adjusting
    balances is covered in the next section.</para>
  </sect1>

  <sect1 id="cbook-together1">
    <title>Putting It All Together</title>

    <para>In <xref linkend="chapter_txns"></xref>, you entered some transactions 
    in your checking account. In this chapter, we will add more transactions and 
    then reconcile them.</para>

    <sect2 id="cbook-puttoget-open2">
      <title>Opening Balances</title>
    
      <para>So, let's get started by opening the gcashdata file you saved in the
      last chapter (<filename>gcashdata_4</filename>). Your chart of accounts
      should look like this:</para>

      <screenshot id="cbook-gcashdata4">
        <mediaobject>
          <imageobject>
            <imagedata fileref="figures/cbook_gcashdata4.png" format="PNG"
                       srccredit="Bengt Thuree" />
          </imageobject>
  
          <textobject>
            <phrase>The Chart of Accounts</phrase>
          </textobject>

          <caption>
            <para>This image shows the Chart of Accounts.</para>
          </caption>
        </mediaobject>
      </screenshot>
    </sect2>

    <sect2 id="cbook-puttoget-transactions">
      <title>Add some transactions</title>

      <orderedlist>
        <listitem>
          <para>Now open the Checking account from the main window. In the last  
          chapter, you entered some paycheck transactions as deposits into  
          Checking. Now we will enter another kind of deposit - a transfer of  
          money from Savings into Checking. On a blank line, enter a transaction  
          to transfer $500 from Savings to Checking (In this case, the last
          transaction date was March 28, but this transfer transaction took
          place on the March 24). Your Transfer account will be Savings, since
          you are in the Checking account. Your Checking account should now look
          like this:</para>

          <screenshot id="cbook-transferin">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_transferin.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The Checking Account Register</phrase>
              </textobject>
  
              <caption>
                <para>This image shows the Checking Account Register.</para>
              </caption>  
            </mediaobject>
          </screenshot>
        </listitem>

        <listitem>
          <para>Now let's write some checks on this account. First, write a
          check to HomeTown Grocery for $75 (5 of March). Your transfer account
          is Groceries, since all of this money is going to buy groceries. Next,
          write a check to ABC Hardware for $100 (6 of March), and split this
          amount between two expenses: Household $50 and Tools $50. You will
          need to create an expense type account for each of these, then enter
          splits for them. Your checking account should now look like
          this;</para>

          <screenshot id="cbook-checkexamp">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_checkexamp.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The Checking Account Register</phrase>
              </textobject>
  
              <caption>
                <para>This image shows the Checking Account Register after
                registering some more checks.</para>
              </caption>
            </mediaobject>
          </screenshot>
        </listitem>
  
        <listitem>
          <para>Suppose you now need to withdraw some money. You don't have a
          cash account set up in your chart of accounts, so you will need to
          create one. Create the account as <guilabel>Cash</guilabel> as a  
          top-level account of type <guilabel>Asset</guilabel>. From your
          Checking account register, enter an ATM type withdrawal to transfer
          $100 from Checking to Cash on the 25 of March.</para>
  
          <screenshot id="cbook-atm">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_atm.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The Checking Account Register</phrase>
              </textobject>
  
              <caption>
                <para>This image shows the Checking Account Register with an ATM
                withdrawal.</para>
              </caption>
            </mediaobject>
          </screenshot>
        </listitem>
      </orderedlist>
    </sect2>
  
    <sect2 id="cbook-puttoget-reconcile">
      <title>Opening Balances</title>

  
      <para>Now we are ready to reconcile this Checking account, using this
      sample bank statement:</para>

      <screenshot id="cbook-bankstmt">
        <mediaobject>
          <imageobject>
            <imagedata fileref="figures/cbook_bankstmt.png" format="PNG"
                       srccredit="Bengt Thuree" />
          </imageobject>
  
          <textobject>
            <phrase>A sample Bank Statement</phrase>
          </textobject>
  
          <caption>
            <para>This image shows a sample Bank Statement.</para>
          </caption>
        </mediaobject>
      </screenshot>
  
      <orderedlist>
        <listitem>
          <para>Select <guimenu>Actions</guimenu><guimenu> -&gt;
            </guimenu><guimenuitem>Reconcile</guimenuitem> from the menu, and fill
            in the Closing balance as $1451.79. Click OK to begin reconciling the
            account. Check off the entries as they appear on the sample statement.
            When you have checked off all your entries, the reconcile window
            should look like this:
          </para>
  
          <screenshot id="cbook-reconexamp">  
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_reconexamp.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The reconcile window</phrase>
              </textobject>  
  
              <caption>
                <para>This image shows the reconcile window with a $5
                difference.</para>
              </caption>
            </mediaobject>
          </screenshot>
  
          <para>Notice that your reconciled balance differs from your ending
            balance by $5.00. If you look at the sample bank statement, you will
            see there is a $5.00 service charge that has not been added to your
            Checking account.
          </para>
        </listitem>
  
        <listitem>
          <para>So click on the Checking register and add the $5.00 service
          charge to your Checking account. On a blank line of the Checking
          register, enter a transaction to transfer $5.00 from Checking to a
          Service Charges account. (You will need to create the Service Charges
          account as type expense.) Use the transaction date printed on the  
          sample statement as the date you enter for this transaction. Your
          Checking account should now look like this:</para>
  
          <screenshot id="cbook-servch">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_servch.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The Checking Account Register</phrase>
              </textobject>
  
              <caption>
                <para>This image shows the Checking Account Register with
                service charge added.</para>
              </caption>
            </mediaobject>
          </screenshot>
        </listitem>

        <listitem>
          <para>Click back on the Reconcile window, and you should see the
          service charge now under Funds Out. Click on it to mark it as
          reconciled, and note that the difference amount below now becomes
          0.00. Click the Finish button on the tool bar to complete the
          reconciliation. The Reconcile R column in your Checking register
          should now show <guilabel>y</guilabel> for each transaction you just
          reconciled. Also observe the bottom status row that now indicates
          "Reconciled: USD 1451.79"</para>
  
          <screenshot id="cbook-reconciledCheckAct">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_reconciledCheckAct.png"  
                           format="PNG" srccredit="Bengt Thuree" />
              </imageobject>
  
              <textobject>
                <phrase>The Checking Account Register</phrase>
              </textobject>

              <caption>
                <para>This image shows the reconciled Checking Account
                Register.</para>
              </caption>
            </mediaobject>
          </screenshot>
        </listitem>
  
      </orderedlist>
    </sect2>

    <sect2 id="cbook-puttoget-save">
      <title>Save file</title>

      <para>Go back to the main window and save your file with the new
      <filename>gcashdata_5</filename> name. Your chart of accounts is
      steadily growing, and it should now look like this:</para>

      <screenshot id="cbook-chartaccts5">
        <mediaobject>
          <imageobject>
            <imagedata fileref="figures/cbook_chartaccts5.png" format="PNG"
                       srccredit="Bengt Thuree" />
          </imageobject>

          <textobject>
             <phrase>The Chart of Accounts</phrase>
          </textobject>  
  
          <caption>
            <para>This image shows the Chart of Accounts.</para>
          </caption>
        </mediaobject>
      </screenshot>
    </sect2>

    <sect2 id="cbook-puttoget-reports">
      <title>Reports</title>
            
      <para>As we did in the previous chapter, lets have a look at a 
        <guilabel>Cash Flow</guilabel>, and a <guilabel>Transaction</guilabel> Report.
      </para>   

      <orderedlist>
        <listitem>
          <para>First lets have a look at the <guilabel>Cash Flow</guilabel> report
          for the month of March.</para>
          <para>Select the cash flow report from <guimenu>Reports</guimenu> -&gt; 
            <guisubmenu>Income &amp; Expense</guisubmenu> -&gt; 
            <guimenuitem>Cash Flow</guimenuitem>
          </para>
      
      	  <screenshot id="cbook-puttoget2-Cash">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_CashFlow.png" format="PNG"
                           srccredit="Bengt Thuree" />
              </imageobject>

              <textobject>
                <phrase>Cash Flow report for the month of March</phrase>
              </textobject>

              <caption>
                <para>This image shows the Cash Flow report after 
                <xref linkend="chapter_cbook"></xref>.</para>
              </caption>
            </mediaobject>
          </screenshot>
        </listitem>

        <listitem>
          <para>Now lets have a look at corresponding transaction report for the various 
            Asset accounts.
          </para>
          <para>Select the transaction report from <guimenu>Reports</guimenu> -&gt; 
            <guimenuitem>Transaction Report</guimenuitem>
          </para>
          
      	  <screenshot id="cbook-puttoget2-TransactionRptChecking">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_TransactionRptAssets.png" 
                           format="PNG" srccredit="Bengt Thuree" />
              </imageobject>

              <textobject>
                <phrase>Transaction Report for the Assets accounts during March</phrase>
              </textobject>

              <caption>
                <para>This image shows the Transaction Report for the Assets accounts
                  during March.
                </para>
              </caption>
            </mediaobject>
          </screenshot>
          
        </listitem>
 
          
        <listitem>
          <para>Now lets change the transaction report to only show the various
            Expenses account.
          </para>
          
      	  <screenshot id="cbook-puttoget2-TransactionRptExpenses">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_TransactionRptExpenses.png" 
                           format="PNG" srccredit="Bengt Thuree" />
              </imageobject>

              <textobject>
                <phrase>Transaction Report for the Expenses accounts during March</phrase>
              </textobject>

              <caption>
                <para>This image shows the Transaction Report for the various Expense accounts
                  during March.
                </para>
              </caption>
            </mediaobject>
          </screenshot>
          
        </listitem>
        
      </orderedlist>
 

      <para>Notice that you have not yet used one of the accounts listed in your
        chart, the <guilabel>Credit Card</guilabel> account. Now that you know how
        to keep track of your bank and cash accounts in GnuCash, you may want to
        start tracking your credit cards as well. GnuCash provides a special type
        of account for credit cards, and this is discussed in the next
        chapter.
      </para>
    </sect2>

  </sect1>
</chapter>
