What should I do when the reality of money present and the amounts in GnuCash differ?
I started doing double entry bookkeeping with GnuCash to keep track of my personal finances, down to the penny. I think I am familiar with most of the basics of double entry bookkeeping, I took a course in it many years ago and read the GnuCash manuals, but still some things are unclear to me. What should I do when the reality of money present and the amounts in GnuCash differ? In detail:
I have as assets my back account and "cash in wallet", and many expense accounts for food, gas, water, electricity, clothes, transport/commuting and so on. At the end of each day I enter what money came in, if any, and what I spent, mostly from "cash in wallet". But for example today, I had three penny more in my wallet than I should have. How am I supposed to reflect this in my bookkeeping? Obviously I made a mistake somewhere, but for the life of me I can't track it down. Now three penny might not matter at all, but I need to enter this somehow. As income from the Opening Balances Equity? Or, there is an account called "Imbalance" of type "Bank" which I got as default? And what should I do if I some day I find that I have less in my wallet than GnuCash says I have?
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The ”standard“ thing to do, after double checking your numbers to see if you can find or remember the actual reason for the discrepancy, is to use an Income account for ”extra“ money and an expense account for ”lost“ money. The Imbalance account is meant as a temporary placeholder for monies not yet put into their right account.
I personally use Income:Other Income for such found money, and Expenses:Adjustment for lost money.
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