G'day Jason,
On Thu, Apr 20, 2000 at 11:20:33PM -0500, Jason Godfrey wrote:
> I am thinking about setting up some sort of Accounts Payable acount. When I
> get the bill for my rent, I would apply the amount to the Expense : Rent
> account and transfer from the Accounts Payable account. Then when I actually
> write the check to pay the rent I would enter a transaction between the
> checking account and the Accounts Payable account.
>
> Is this the correct approach? This seems useful - I would be able to tell how
> much I owe in outstanding bills, but it also seems redundant.
I'm not an accountant, but what you've described is the approach that I use
and I find that it works very well. Double-entry makes is very difficult
to `lose' money, and if I didn't use it I would have a much harder time in
keeping track of my finances.
> If this is the right approach, would it make sense to have a seperate sub
> account for each company I get bills from? IE have a sub account for the
> gas company, the phone company, the electric company?
It makes sense if you want to know information down to that level of
detail. For example, I usually pay my bills pretty quickly and so
only have a single `Accounts Payable' liability account. However,
I want to keep tabs on how my phone, water, and other bills change,
so I have seperate expense accounts for each type of utility.
If I wanted a better idea of where my accounts-payable lie, then I would
break it up into sub-accounts.
Hope that you've found the above useful,
Paul
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