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<!DOCTYPE chapter SYSTEM "gnc-gui-C.dtd">
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       modified: July 9th 2006
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  		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
    &app;. Managing your checkbook register is the first step of tracking your finances, and &app;
    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 &app;, because of its auto-completion feature. &app;
    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 &app; 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 &app; 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 the &app; manual.
    </para>

    <para>Let&rsquo;s start with the bank accounts you&rsquo;ll need. You need one &app; bank type account for
      each physical bank account you wish to track. If you are setting up your own accounts or using
      the default &app; 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> assistant, 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&rsquo;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 and assign an appropriate tax category in the Income Tax
        Information Dialog (
        <menuchoice>
          <guimenu>Edit</guimenu><guimenuitem>Tax Report Options</guimenuitem>
        </menuchoice>
        ) 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 &app; 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
      &app; 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 &app;, 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 &app;.
    </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. &app; 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&rsquo;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&rsquo;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>&app; 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
      &app;, 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&rsquo;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&rsquo;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"
                       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 <emphasis>Checking</emphasis> 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 <emphasis>Savings</emphasis> to
            <emphasis>Checking</emphasis> (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
            <emphasis>Savings</emphasis>, since you are in the <emphasis>Checking</emphasis>
            account. Your <emphasis>Checking</emphasis> account should now look like this:
          </para>

          <screenshot id="cbook-transferin">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_transferin.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&rsquo;s write some checks on this account. First, write a check to HomeTown Grocery for $75
            (5th of March). Your transfer account is <emphasis>Groceries</emphasis>, 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: <emphasis>Household</emphasis> $50
            and <emphasis>Tools</emphasis> $50. You will need to create an
            <emphasis>Expense</emphasis> 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"
                           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&rsquo;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 <emphasis>Checking</emphasis> account register, enter an ATM type withdrawal
            to transfer $100 from <emphasis>Checking</emphasis> to <emphasis>Cash</emphasis> on the
            25 of March.
          </para>

          <screenshot id="cbook-atm">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_atm.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 <emphasis>Checking</emphasis> account, using this sample bank
        statement:
      </para>

      <screenshot id="cbook-bankstmt">
        <mediaobject>
          <imageobject>
            <imagedata fileref="figures/cbook_bankstmt.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
            <menuchoice>
              <guimenu>Actions</guimenu> <guimenuitem>Reconcile</guimenuitem>
            </menuchoice>
            from the menu, and fill in the Closing balance as $1451.79. Click
            <guibutton>OK</guibutton> 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"
                           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 <emphasis>Checking</emphasis> account.
          </para>
        </listitem>

        <listitem>
          <para>So click on the <emphasis>Checking</emphasis> register and add the $5.00 service charge to your
            <emphasis>Checking</emphasis> account. On a blank line of the
            <emphasis>Checking</emphasis> register, enter a transaction to transfer $5.00 from
            <emphasis>Checking</emphasis> to a <emphasis>Service Charges</emphasis> account. (You
            will need to create the <emphasis>Service Charges</emphasis> account as type
            <guilabel>Expense</guilabel>.) Use the transaction date printed on the sample statement
            as the date you enter for this transaction. Your <emphasis>Checking</emphasis> account
            should now look like this:
          </para>

          <screenshot id="cbook-servch">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_servch.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 <guilabel>Funds
            Out</guilabel>. Click on it to mark it as reconciled, and note that the difference
            amount below now becomes 0.00. Click the <guibutton>Finish</guibutton> button on the
            <emphasis>Toolbar</emphasis> to complete the reconciliation. The Reconcile R column in
            your <emphasis>Checking</emphasis> register should now show <guilabel>y</guilabel> for
            each transaction you just reconciled. Also observe the bottom status row that now
            indicates <guilabel>Reconciled: USD 1451.79</guilabel>
          </para>

          <screenshot id="cbook-reconciledCheckAct">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_reconciledCheckAct.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"
                       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, let&rsquo;s have a look at a <guilabel>Cash Flow</guilabel>, and
        a <guilabel>Transaction</guilabel> Report.
      </para>

      <orderedlist>
        <listitem>
          <para>First let&rsquo;s have a look at the <guilabel>Cash Flow</guilabel> report for the month of March.
          </para>

          <para>Select the cash flow report from
            <menuchoice>
              <guimenu>Reports</guimenu> <guisubmenu>Income &amp; Expense</guisubmenu>
              <guimenuitem>Cash Flow</guimenuitem>
            </menuchoice>
            .
          </para>

          <screenshot id="cbook-puttoget2-Cash">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_CashFlow.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 let&rsquo;s have a look at corresponding transaction report for the various Asset accounts.
          </para>

          <para>Select the transaction report from
            <menuchoice>
              <guimenu>Reports</guimenu> <guimenuitem>Transaction Report</guimenuitem>
            </menuchoice>
            .
          </para>

          <screenshot id="cbook-puttoget2-TransactionRptChecking">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_TransactionRptAssets.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 let&rsquo;s change the transaction report to only show the various <emphasis>Expenses</emphasis>
            account.
          </para>

          <screenshot id="cbook-puttoget2-TransactionRptExpenses">
            <mediaobject>
              <imageobject>
                <imagedata fileref="figures/cbook_TransactionRptExpenses.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 &app;, you may want to start tracking your credit cards as well. &app; provides a special
        type of account for credit cards, and this is discussed in the next chapter.
      </para>
    </sect2>
  </sect1>
</chapter>
