# Making the most of &kappname;

While you could go ahead, clicking some buttons and filling in some data, after a time, you could decide you have done it wrong and start again, even if you did read the documentation on each part of &kappname;.

You will get a more effective system if you spend a little time planning how you are going to use &kappname;, so follow the steps given here.

## Basic Accounting

Imagine your money as balls, or beans, and to stop them rolling around you keep them in a box, or pot. Accounting, or Bookkeeping, is the process of counting and keeping track of the beans in the pot, or several pots.

You have some money in the pot marked Cash. You buy some goods, so you take some beans out of the cash pot and place them into another pot marked Supplier. The supplier gives you some goods in exchange for the cash, so you take the beans out of the pot marked Supplier and put them in the pot marked Goods.

The goods have a value (the price you paid) so you still have the same amount of beans, some representing cash and some representing goods.

In this case you have two movements of beans, or transactions. Each transaction needs two entries, one to take beans out and one to put beans in. This is called double entry bookkeeping or double entry accounting. The recording of the transactions is done in a Ledger; each pot is known as an Account or Ledger code.

Now you take some goods and give them to a customer, who gives you some cash in exchange. The goods were worth some beans and, hopefully, the customer has given us more beans than that, so making a profit. To over simplify, the beans from the Goods pot come back as Cash, but we can split that as the Cost of Goods sold and Profit. This transaction has three entries; one side of the double entry has been split.

This will be covered in more detail later on in this handbook.

### Defining the accounts (personal records)

Most accounts, or pots, above represent a measure of our Worth. The cash and goods represent our Assets; so does what we are owed if our customers have not yet given us the money. The money we owe, say if we had not paid our suppliers, are our Liabilities. These accounts are transferable to Cash and have a value.

Any pots that cannot be valued are Income or Expense. Our phone bill (or the phone company to which we pay the bill) cannot be valued; we know how much we have paid, but not how much anyone else has paid. We know how much our employer has paid us, but we do not know how much they have paid anybody else, or how much money they have left to pay us next month. Although we cannot determine an actual value for these pots, it is useful to monitor how much we have put into or taken out of each of them.

In some cases a supplier is a Liability, in others it is an Expense. This is something we need to consider and decide for each case. Similarly, you may set up a loan as a Liability, particularly if you transfer the money into your bank account, but it could be an Expense if it was to buy some furniture.

Consider how you want to track and analyze your income and expenses. This will help you decide how to set them up in &kappname;.

Finally, consider if you want everything in one set of accounts, or two or more. This may depend on the legal framework or just how you want to analyze things. Each set of accounts would be handled separately.

### Defining the accounts (business records)

There are similarities to setting up accounts for personal use, but there are additional considerations, including legal guidelines and requirements. &kappname; does not explicitly address any of these issues, as it has been designed as a personal finance manager. In addition, these additional issues are not addressed in this handbook, but you must be aware of them if you are going to attempt to use &kappname; for a business.

## Mapping your finances to &kappname;

So, collect up your papers and see the following sections for each item in &kappname;.

### Accounts

These hold a value. Transactions are created against one or more accounts.

#### Accounts - Asset

These are the accounts which hold your money and possessions that you wish to monitor. The following types are available:

Checking

- Standard bank checking account.

Savings

- Standard bank savings account.

Cash

- Money in your hand or wallet.

Loan

- Loans you make to someone else.

Investment

- Money you invest.

Asset

- Property, collections, etc.

#### Accounts - Liability

These are the accounts which represent your debts and money owed that you wish to monitor. The following types are available:

Credit card

- Standard credit card account.

Loan

- Loans made to you, mortgages, etc.

Liability

- Anything else you owe that is not a loan.

### Institutions

These are completely optional and can be used to group accounts, and show a total value for all accounts in each group.

### Categories

These represent non-managed income and expense accounts that do not have a value. The total value of transactions is shown against each category. A category or transfer account is required for each transaction.

### Sub-Categories

Categories can be split into sub-categories, but this relationship is only for display purposes, as the sub-category totals are not included in the higher level category total.

### Tags

Tags are very similar to Categories, as they are also non-managed accounts that do not have a value. However, unlike Categories, the use of Tags is completely optional.

### Payees

These are optional for transactions. They are required for Scheduled transactions. A transaction history, with category, is shown against each payee.

### Scheduled transactions

Where transactions occur on a regular basis, these can be set up against a Schedule. Transactions are created from a schedule; any that are overdue can be seen on the home page.

## Useful Tips

Unless you keep your money under your mattress or under the floorboards, you probably make use of one or more institutions where you have accounts, which may be in credit or debit. In order to familiarize yourself with the way &kappname; works, choose an account you want to track with &kappname; and select File New in order to set up an account file.

If you have used another personal finance manager, you may be able to import the data from it into &kappname;.

If you have some regular receipts into or outgoings from this account, go to Payee and enter the names of both the payers and the payees involved; then go to Schedule and fill in a New Schedule for each recurring transaction. If you haven't entered the payee or payer, &kappname; will offer you the opportunity to do this in the middle of entering the schedule.

To add other new transactions go to Ledgers; you can add new payees and categories in the middle of a transaction or by going to Payees or Categories before entering the transaction.

You will probably find that the default Categories do not exactly match your needs; you can easily delete ones you know you are never going to need and add others that you need. But when you are entering a transaction, you only have to type a few letters of a category and &kappname; will offer you a drop down list of the matching categories from which to choose.

You can add different accounts managed by different institutions; the preferred one will show when you open &kappname; but you can quickly switch to any of the others.

When you make a payment, &kappname; will work out what the next check number should be; delete this if you are not making a check payment or edit it if the first check you enter is not check number 1. Alternatively, it is possible to switch off auto-increment of check numbers.

Every so often you may get statements of your account from the institutions you use; you can reconcile your &kappname; accounts against these statements so that you have an accurate statement of the current state of your finances.

If you go to Reports, you will find several default reports; to customize these, open one similar to the sort you prefer and then select 'New' (not 'Copy'); you can then customize this to your needs and mark it as a preferred report if you wish.

Though &kappname; is not intended for use in a business context, if you are running a business on your own and so do not need payroll functions, you will probably find that &kappname; is sufficiently customizable to meet your needs particularly as it comes with budgeting and forecasting features and you can export your customized reports via CSV into other applications.