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3 votesBaptiste Roussel shared this idea ·
An error occurred while saving the commentBaptiste Roussel commented
We must not confuse planning for the future and recording transactions.
GnuCash’s greatest strength is that it is built on sound accounting principles. While financial accounting is all about recording transactions that occurred in the past. Managerial accounting is all about forecasting the future. What our best estimates of future Income; Expenses; Assets; Liabilities and Equity. These forecast are then used to answer questions. One of the most critical questions being “Will I have the cash to pay the cash outflows as they are expected to occur?”
As a side note, proper use of both is brilliantly described in: “Gnucash 2.4 Small Business Accounting: Beginner's Guide”. The author suggests using GnuCash to assist in the initial ruth forecast. He then exports to Excel for adjusting the numbers and generating reports.
I recommend this book to either anyone new to GnuCash and especially to those with no “business” accounting education. You can get Ashok Ramachandan’s book here: https://www.packtpub.com/hardware-and-creative/gnucash-24-small-business-accounting-beginners-guide (To the best of my knowledge, I am in no way, directly or indirectly, affiliated to the author of this book.)
My personal rant with using GnuCash for budgeting = forecasting = managerial accounting is that I just can’t. Why? I plan 12 months ahead (trailing 12 months).
• The software gets very slow.
• The display of column is impractical and whenever changed reverts to its previous annoying state.
I suggest getting a managerial accounting on board to assist with the task.
GnuCash is an outstanding piece of software to record past transactions (financial accounting). Yet, it’s potential as a rock solid tool to assist in planning for the future (budgeting = managerial accounting) remains mainly untapped.
Just like in the Ghost Buster movie, in accounting bad things happen if you the mix the streams (past & future).
PS: Whether you want peace in your personal life finances or have ambitions to grow or start a business you can find accounting courses online on Coursera; EdX and the like.