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Press Enter to accept your new category, and Tab to leave the transfer field. A dialog box will appear, asking you if you would like to create the Expenses:Food account. Click Yes.

The New Account window appears. The defaults should be fine, so click OK.

Skip the Deposit field, enter 50.00 in the Withdrawal field, and press Enter.

Congratulations! You have not only created a transaction recording your food purchase, but have also created the expense account for it. Future food transactions can now go into this account, and a quick glance at the accounts window will show you exactly how much you have spent on food.

GnuCash's autocomplete feature is very helpful. Once you have created subaccounts, typing a colon after an autocompleted account will jump directly to the end of that account and begin with a listing of its subaccounts.

Getting a tax refund

Most people think of tax refunds as income, but they aren't: they are rebates. If you keep track of your taxes from each paycheck, recording a tax refund is as simple as creating a rebate from your expense account to your checking account. Here's how it works:

Open the Checking Account register.

Create a new transaction with today's date and Tax Refund as the description.

Since we recorded federal taxes from our paycheck as going to the Expenses account, enter Expenses in the transfer field.

Enter 50.00 in the Deposit field.

Press Enter to complete the transaction.

You now have 50 more dollars in your checking account, but if you look at the accounts window, you will notice that your income has not increased. Instead, total assets have increased, and expenses have decreased. This is an accurate depiction of what happens when you get a tax refund. No longer can you fool yourself into thinking that a tax refund is extra money you make every year. You already earned it — you're just getting it back!

Buying a car

An automobile is a big expense. And if you're buying a vehicle on credit, it becomes an even more costly one. Luckily, GnuCash can keep track of every cent of the purchase, as well as what portion of your monthly payment goes toward principle and what portion is lost as interest. The process of setting up a car purchase is also a good example of how to handle a house purchase or other type of loan.

Here's the scenario: You've just bought a brand new car for $20,000. You put down $5000 and will be paying a $400 monthly payment for 60 months. You may have received an amortization table from your lender showing you how much money goes to principle and interest each month. If you didn't get an amortization table, you might want to ask your lender for one, or create one yourself using tools available at a web site such as http://www.bankrate.com. You will probably be surprised at how much money you spend on interest. To record a car payment transaction:

Begin by creating a new account. Call it Car Loan, set its Parent Account to New Top Level Account, and its account type to Liability.

Create a second new account called Car, set its Parent Account to Assets:Current Assets, and its account type to Asset.

Open the account register for the Car account.

Start a new transaction. Enter Buy Car as the description and then click the Split button on the toolbar.

The first subtransaction records the car's value. Enter Car Value as the description. The account will be Assets:Current Assets:Car, and the Increase value will be 20,000.

That 20 grand has to come from somewhere. The first place is your down payment. Enter Down Payment as the description and Assets:Current Assets:Checking Account as the account, and decrease the account by $5,000. (Yes, I know that in this example this makes your bank account negative. Don't try this at home!)

Unfortunately, tax, title, and license cost you another $1,500. Enter the description as TT&L and the account as Expenses, and increase the account by $1,500.

You now have a $16,500 balance for the transaction; this is your loan amount. Enter Loan Principle for the description and Car Loan for the account,