Depending on the level of detail you want to use in following your expenses, you may need as few as 8 or 10 expense accounts, or as many as 150 or more.

You create expense accounts by clicking on the "New Rec" button while viewing the Expense Accounts form. That presents you with an empty income record form. You then enter the title of the account you want to create, and specify (by selecting from the combo boxes) what linkages you want set up, as follows:

Expense accounts are used simply to allow you to track where the money goes. For example, you might start out tracking only "utilities" or "Salary", then gradually become more curious and want to track gas, electricity, water, television, telephone, long distance, internet, etc., or Lay and Clerical Salary, Housing Allowance, etc.

On all expense accounts, you must specify the expense accounting category and the fund that the account belongs to. If the accounting category is one that generates equity (purchase of Furniture & Fixtures, land, or buildings, or mortgage payments), a third selection must also be made: you must select the fund whose value will increase as a result of this payment. For example, if you buy new pews or chairs, the accounting category would be "16: Capital: Bldgs/Furn & Fixtures". Tabbing out of that combo box would cause the "Capital Fund Name for Equity Posting" combo box to appear, and you would select a fund like "Church's Furn & Fixtures Fund" to receive the increase in value. This would also happen if you selected "26: Payment of Mortgage Principal". When the check is written and posted for transactions that involve these kinds of payments, CB/DB generates a Journal Entry that causes the amount paid to be added to the fund that you have here designated.

For those accounts that are also related to a liability, you must select from the combo box the name of the liability.

As an example, when you issue a salary check, the gross pay may be $1000, but there will also be money withheld for Federal Income Tax, Social Security, Medicare, and perhaps state and local taxes. The net amount of the check may be $800. At the time of the payment of the salary check, you have actually removed $800 from your bank account, and retain the other $200 within that account that actually belongs to the taxing authorities. Until that payment is made, the $200 is considered a liability retained in your account. When the payment is made, the liability is closed out. Until the next salary cycle.... If you make payments on a quarterly basis, the liability will continue to increase each month until paid; if the payment for the first quarter is made in April, and April salary checks are written, you will still show a liability at the end of that month. For that reason, you should always look at the balance in your Fund Account, rather than in your Asset Account, when deciding on what bills you can pay at any point in time.

In addition, if you want to have reports group income account by some other schema, you can specify "user defined groupings" by creating your own groupings, via the "Utility Tables" switchboard. Once you have created your own groupings, you may select them on this form in the "Report Grouping Categories" combo box.

Mortgage Liabilities work differently. After a building project, let's say you now have a new building worth $1,000,000 and that you have a $500,000 mortgage on it. In this case, you would have an asset valued at $1,000,000, made up of $500,000 in equity (fund) and a $500,000 liability. As you make mortgage payments, each one reduces the amount of your mortgage by that part of the payment toward the principal, and increases your equity in the building by the same amount. In order to make this happen automatically, whenever you post a check containing a mortgage payment, CB/DB reduces the mortgage the same way it reduces the bank account for the cash sent to the mortgage company. In addition, it generates an income Journal Entry to increase the equity in the building by the amount of the principal reduction.