Liabilities do not add correctly in Net Worth
When I increase a liability account, it shows in the net worth report as a positive number. It affects the net worth by adding to instead of subtracting from,. The net worth formula should be assets - liabilities = net worth instead it appears to be assets + liabilities = net worth.
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1 Posted by ljb on 23 May, 2012 12:22 AM
Works fine for me.
Just wondering if you put the Initial Liability into the account properties? The liability account register should always display a negative number for the balance. Yes, when you increase the liability account balance - by adding a positive number to the balance, i.e. paying down the liability - you do increase the contribution of that account to your net worth. But the balance of the account is still negative, so the account reduces your net worth - just less than before the increase.
2 Posted by Ben Spencer on 23 May, 2012 12:26 AM
In Moneydance Liability accounts carry a negative balance. When you enter a transaction in a liability account in the increase column this makes the liability balance larger but it is displayed as a negative number. Which is to say if you owe money on a liability account you should see the balance in red with a minus sign as a prefix.
If you had an asset of 1000 and a liability of 500 (displayed as -500) your net worth will be calculated as 500.
Ben Spencer
Moneydance Support
Ben Spencer closed this discussion on 23 May, 2012 12:26 AM.
richard.denove re-opened this discussion on 23 May, 2012 12:25 PM
3 Posted by richard.denove on 23 May, 2012 12:25 PM
Sorry but I disagree with this assumption. I have tested this and included
screenshots.
I setup a liability with $300 balance, which showed negative. I added 400
more to the liabilty in the the increase column. See the net worth. It
should read $700 instead it reads $100 positive.
4 Posted by -Kevin N. on 23 May, 2012 01:16 PM
Hi Richard,
If I'm not mistaken, adding $400 of liability to the account decreases the overall value of the account and thus should be entered into the 'Decrease' column.
HTH -Kevin N.
5 Posted by richard.denove on 23 May, 2012 01:23 PM
I would agree if this was an asset account (ex. stamp collection). However
if I owed someone money and i took more from them, i would add to the
liability (the value of the liability is going up) - if I paid them money
then I would decrease.
6 Posted by -Kevin N. on 23 May, 2012 01:32 PM
Hi Richard,
The NEGATIVE value of the liability is going up. Which is to say that the POSITIVE value is going down. Hense the entry goes into the 'Decrease' column.
HTH -Kevin N.
System closed this discussion on 31 Mar, 2015 03:48 PM.