| > But sales income would be negative (it is a credit). I wonder if that would confuse people. It does tend to cause some confusion, but IMHO less than you would get with negative asset balances, much less the traditional version where "credits" and "debits" have different signs depending on the type of account and nothing ever just sums to zero. The less confusing way to think of it is that an income account represents not "how much income have I received" but rather the source of the income, e.g. your employer or customer. They paid you, so they have less than they started with. ⋄ Money moves from employer to me: decrease "Income:Employment" and increase "Assets:Cash". ⋄ Money moves from me to my landlord: decrease "Assets:Cash" and increase "Expenses:Rent". ⋄ Deposit money at the bank: decrease "Assets:Cash" and increase "Assets:Bank:Checking". ⋄ Take out a loan: decrease "Liabilities:Loan" (negative since I owe them money) and increase "Assets:Cash". Note that Income and Expense account balances are relative—which is why it makes sense for Income balances to sometimes be negative, and why these accounts are zeroed out at the end of the reporting period with transfers to or from equity—in contrast to most other accounts which have absolute balances. |