An account is a place for keeping track of what you own, owe, spend or receive. Although you only have one main data file, that file will contain many accounts. You probably already think of money you own or owe as being in an account. For example, at some point you opened checking and savings accounts at a particular bank, and that bank sends you monthly statements showing how much money you own in these accounts. Credit card accounts also send you statements showing what you owe to a credit card company, and the mortgage company may send you periodic statements showing how much you still owe on your loan.
In GnuCash, these transfers are known as transactions, and each transaction requires at least two accounts. To enter the cash withdrawal, for example, you would enter a transfer of money from a bank account to a cash account. You would record the grocery check as a transfer from a checking account to a groceries expense account. And the paycheck deposit is recorded as a transfer from an income account to a bank account.
The main principle to remember is that there are at least two parts to every transaction, and the total amount transferred from a set of accounts must equal the total amount transferred to another set of accounts. When a transaction transfers an equal sum from accounts to other accounts, that transaction is said to be in balance. In GnuCash, as in double-entry accounting, you want to have all of your transactions in balance.
Why is this important to you. If all of your transactions are in balance, then your money is all accounted for. GnuCash has a record of where that money came from and where it was used. By storing the names of all accounts involved in each transaction, you provide data that can be sorted and viewed in report form later. Reports allow you to see things like how much money you made for the year and where it all went, what your net worth is, and what your taxes might be for the year. The more information you provide when entering transactions, the more detailed your reports will be.
