In double entry book-keeping, how should I record writing of a check?
"I'm no accounting expert, but I've never heard of anyone using a separate account to track outstanding checks.  Instead, the software I use (GnuCash) uses a ""reconciled"" flag on each transaction.  This has 3 states:  n: new transaction (the bank doesn't know about it yet), c: cleared transaction (the bank deducted the money), and y: reconciled transaction (the transaction has appeared on a bank statement). The account status line includes a Cleared balance (which should be how much is in your bank account right now), a Reconciled balance (which is how much your last bank statement said you had), and a Present balance (which is how much you'll have after your outstanding checks clear). I believe most accounting packages have a similar feature." I have no idea what the traditional accounting way of dealing with this might be; but does your accounts package has the concept of subaccounts within a bank account?  If so, to me it would make sense that when a cheque is written, you move money in the accounts package from the bank account to a subaccount named 'Cheques Written'; then when it is cashed, move money from that subaccount to the supplier.  Then from a reporting perspective, when you want a report that will correspond to your actual bank statement, run a report that includes the subacconut; when you want a report that tells you how much you have available to spend, rune  a report that excludes the subaccount.
"Selling an asset is not earning income. You are basically moving value from one asset (the laptop) to another (your bank account.) So you reduce the equity that is ""value of all my electronics"" and you increase the asset that is your bank account. In your case, you never entered the laptop in some category called ""value of all my electronics"" so you don't have that to make a double-entry against. The temptation is high to call it income as a result. Depending on the reason for all this double-entry book-keeping for personal finances, that may be fine. Or, you can create a category for balancing and use that, and realize the (negative) value of that account doesn't mean much." "Because you've sold something you've received cash (or at least an entry on your brokerage statement to say you've got cash) so you should record that as a credit in your brokerage account in GnuCash. The other side of the entry should go into another account that you create called something like ""Open Positions"" and is usually marked as a Liability account type (if you need to mark it as such). If you want to keep an accurate daily tally of your net worth you can add a new entry to your Open Positions account and offset that against Income which will be either negative or positive depending on how the position has moved for/against you. You can also do this at a lower frequency or not at all and just put an entry in when your position closes out because you bought it back or it expired or it was exercised. My preferred method is to have a single entry in the Open Positions account with an arbitrary date near when I expect it to be closed and each time I edit that value (daily or weekly) so I only have the initial entry and the current adjust to look at which reduces the number of entries and confusion if there are too many." Personal finances are not intuitive for everyone, and it can be a challenge to know what to do when you haven't been taught.  Congratulations on recognizing that you need to make a change. The first step that I would recommend is what you've already done: Assemble your bank statements so you can get an accurate picture of what money you currently have.  Keep organized folders so you can find your bank statements when you need them. In addition to the bank statements for your checking and savings accounts, you also need to assess any debt that you have.  Have you taken out any loans that need to be paid back?  Do you have any credit card debt?  Make a list of all your debts, and make sure that you have folders for these statements as well. Hopefully, you don't have any debts.  But if you are like most people, you owe money to someone, and you may even owe more money than you currently have in your bank accounts.  If you have debts, fixing this problem will be one of your goals. No matter what your debt is, you need to make sure that from now on, you don't spend more money than you take in as income.  To do this, you need to make a budget. A budget is a plan for spending your money.  To get started with a budget, make a list of all the income you will receive this month.  Add it up, and write that amount at the top of a page.  Next, you want to make a list of all the expenses you will have this month.  Some of these expenses are more or less fixed: rent, utility bills, etc.  Write those down first.  Some of the expenses you have more control over, such as food and entertainment.  Give yourself some money to spend on each of these.  You may also have some larger expenses that will happen in the future, such as a tuition or insurance payment.  Allocate some money to those, so that by the time that payment comes around, you will have saved enough to pay for those expenses. If you find that you don't have enough income to cover all of your expenses in a month, you need to either reduce your expenses somewhere or increase your income until your budget is at a point where you have money left over at the end of each month. After you've gotten to this point, the next step is figuring out what to do with that extra money left over.  This is where your goals come into play.  If you have debt, I recommend that one of your first goals is to eliminate that debt as fast as possible.  If you have no money saved, you should make one of your goals saving some money as an emergency fund.  See the question Oversimplify it for me: the correct order of investing for some ideas on what order you should place your goals. Doing the budget and tracking all of your spending on paper is possible, but many people find that using the right software to help you do this is much easier.  I have written before on choosing budgeting software.  All of the budgeting software packages I mentioned in that post are from the U.S., but many of them can successfully be used in Europe.  YNAB, the program I use, even has an unofficial German users community that you might find useful. One of the things that budgeting software will help you with is the process of reconciling your bank statements.  This is where you go through the bank statement each month and compare it to your own record of spending transactions in your budget.  If there are any transactions that appear in the statement that you don't have recorded, you need to figure out why.  Either it is an expense that you forgot to record, or it is a charge that you did not make.  Record it if it is legitimate, or dispute the expense if it is fraudulent. For more information, look around at some of the questions tagged budget.  I also recommend the book The Total Money Makeover by Dave Ramsey, which will provide more help in making a budget and getting out of debt. "Ditto Nate Eldredge in many ways, but let me add some other thoughts. BTW there are not four types of account, but five. You're forgetting equity, also called capital. Would it be possible to design an accounting system that does not have 5 types of accounts, maybe is simpler in other ways, and is internally consistent and logical? I'm sure it is. But what's the advantage?  As Nate points out, the existing system has been in use for hundreds of years. Lots of people know how it works and understand it.  I'd add: People have long since worked out how to deal with all the common situations and 99% of the odd cases you're likely to hit. If you invent your own system, you're starting from scratch. You'd have to come up with conventions to handle all sorts of situations. How do I record buying a consumable with cash? How do I record buying a capital asset with credit? How do I record paying off debts? How do I record depreciation? Etc etc. If you worked at it long and hard enough and you're a reasonably bright guy, maybe you could come up with solutions to all the problems. But why?  If you were approaching this saying, ""I see these flaws in the way accounting is done today. I have an idea for a new, better way to do accounting"", I'd say good luck, you have a lot of work ahead of you working out all the details to make a fully functioning system, and then persuading others to use it, but if you really do have a better idea, maybe you can revolutionize the world of accounting. But, ""The present system is too much trouble and I don't want to bother to learn it"" ... I think that's a mistake. The work involved in inventing your own system is going to end up being way more than what it would take to learn the existing system. As to, Aren't liabilities a lot like assets? Well, in a sense I suppose. A credit card is like a checking account in that you can use it to pay for things. But they're very different, too. From an accounting point of view, with a checking account you buy something and then the money is gone, so there's one transaction: reduce cash and increase office supplies or whatever. But with a credit card there has to be a second transaction, when you pay off the charge: So, step 1, increase debt and increase office supplies; step 2, decrease debt and decrease cash. Credit cards charge interest, well you don't pay interest to use your own cash. Etc. One of the beauties of double-entry book-keeping is that every transaction involves a debit and a credit of equal amounts (or a set of debits and credits where the total of the debits equals the total of the credits). If you combine assets and liabilities into, whatever you call it, ""balance accounts"" say, then some transactions would involve a matching debit and credit while others would involve a positive debit and a matching negative debit and no credit. I'm sure you could make such a system work, but one of the neat built-in protections against error is lost. There's a very logical distinction between things that you have or that others owe you, and things that you owe to others. It makes a lot of sense to want to list them separately and manage them separately. I think you'd pretty quickly find yourself saying, ""well, we have two types of balance accounts, those that represent things we have and which normally have positive balances, which we list on chart A, and those that represent things we owe and which normally have negative balances, which we list on chart B"". And before you know it you've just reinvented assets and liabilities." How would I go about this so that I can start using this money? You would open the LLC. The checks were not written out to you, they were written out to the LLC. Only the LLC can endorse them. Try the following apps/services: Receipt Bank (paid service, gathers paper receipts, scans them and processes the data), I've tested it, and it recognizing receipts very well, taking picture is very quick and easy, then you can upload the expenses into your accounting software by a click or automatically (e.g. FreeAgent), however the service it's a bit expensive. They've apps for Android and iPhone. Expentory (app and cloud-based service for capturing expense receipts on the move), "This is a technical term referring to the ""double entry""-styled book keeping of trades by brokers. Suppose a client executes a buy order with their broker.  The broker's accounting for this ""trade"" will be recorded as two different ""deals"" : One ""deal"" showing the client as buyer and the broker as seller, and a second ""deal"" showing the broker as buyer and the clearing house as seller.  The net result of these two deals is that the broker has no net position while the client has a net buy and the clearing house has a net sell with respect to this broker's account as accounted for internally by the broker. (And the same methods apply for a client sell order.) The client/broker ""deal"" record - i.e., the client side of the trade - is called the ""client side booking"", while the broker/clearing house ""deal"" record is called the ""street side booking""." "The standard double-entry approach would just be to create a Liability account for the loan, and then make a transfer from that account to your Asset (Savings) account when the loan proceeds are distributed to you. After that point, the loan doesn't ""belong"" to your Savings account in any way. Each account and transaction is tracked separately. So, you might for instance pay that loan back with a transfer from your Checking account, even though the initial disbursement arrived into your Savings account. In order to see how much of a loan you have remaining, you need to look at the loan's Liability account to see what transactions occurred in it and what its remaining balance is. It sounds like what you're really trying to accomplish is the idea of  ""earmarking"" or ""putting into an envelope"" certain assets for certain purposes. This kind of budgeting isn't really something that Gnucash excels at. It does have some budget features, but there's more about being able to see how actual expenses are to expected expenses for a reporting period, not about being able to ask ""How much 'discretionary' assets do I have left before I start hitting my 'emergency fund'"". The closest you get is splitting up your asset accounts into subaccounts as you suggest, in which case you can ""allocate"" funds for your specific purposes and make transfers between them as needed. That can work well enough depending on your exact goals, though it can sometimes make it a little trickier to reconcile with your actual bank statements. But there's not really an accounting reason to associate the ""emergency fund"" portion of your assets with the remaining balance of your loan; though there's nothing stopping you from doing so if that's what you're trying to do. Accounting answers questions like ""How much have I spent on X in the past?"" and ""How much do I own right now?"". If you want to ask ""How much am I allowed to spend on X right now?"" or ""Am I likely to run out of money soon?"", you may want a budgeting tool rather than an accounting tool."