On Tuesday 08 November 2005 9:37 pm, someone claiming to be Chris Shoemaker wrote: > On Tue, Nov 08, 2005 at 09:03:58PM -0500, Derek Atkins wrote: > > Chris, > > > > most users I would bet enter a CC->Expense transaction when the > > transaction occurs. So you enter your $2000 HDTV expense when > > you buy the TV, not when you pay off your credit card. > > Yeah, I expect this is normal usage. Of course, that means that the > CC payment is straight from assets to liability, e.g. checking account > to CC account -- no expense accounts involved at payment time and you > wouldn't need to budget for them anyway. > > > However > > if you're maintaining a balance on your credit card (or house loan, > > or student loan) you want to include that "cash flow" in your > > budgeting process. > > > > No, paying down a house loan or a student loan is not an expense > > per se, but it is cash flow.. And many people want to budget for > > cash flow. I consider this a must-have feature for a budgeting > > system. > > Well, the standard budgeting tool for planning cash flow is not the > cash budget, but you can make this work in a couple of ways. >
"cash budget" vs "expense budget"? You keep using the term "cash budget" as if I should know what you're talking about, but, well, I dont :( > Let's say you "buy" a car with a CC and you want to budget paying it > off. (1) You could create a Car expense account and as you pay off > the CC, you increase the Car expense account. It's like you're buying > it a little bit at a time. or (2) You could pay the CC with an > asset->liability transfer, with *no record* of what the actual expense > was, and then use the CC liability account in the cash budget. > OK, in my case, the record of the expense was created when the liability was incurred. Say I used a CC to buy a fridge using a 0% interest CC card. Now I want to budget paying down the liability. That would seem to be choice (2), if I'm following along. The same can be applied to a loan. I create a loan liability account to pay for a new car. The creation of the balance on the liability account is causes a balancing entry to the asset account for the new car. > Personally, in this case I would prefer (1), since it records the > expense and (2) is a non-standard use of a cash budget. (E.g. you'd > have to budget negative values, something a cash budget doesn't > usually have.) > OK, I still need a rudimentary tutorial on what other kind of budget, rather than a cash budget, could be utilized to track, for lack of a better way to put it, where the user plans for the money to go month to month. Is the budget intended to ship (if all goes well) in G2 a cash budget? > In any situation where your records actually *have* to record what you > spend money on, (1) is mandatory.(*) What I wonder is whether allowing > (2) is worth the (possible) confusion. > But (2) does *not* preclude the existence of (1). By doing an Asset->Liability transfer (2) I can still find out what the expense was (or asset purchase, in the case of buying a fridge), even though at the time of the (2) transaction, record of the expense is not made. The record of the expense (1) was made when the liability was incurred. > (*) Actually, a real accountant would probably do it a bit > differently; count the whole expense up front, and pay down the > liability account, but the point is, you *have* to use an expense > account, and all liability accounts have to start at zero. You can't > just *create* liability by setting an opening balance on a liability > account. > Hmmm... don't wanna *be* a real accountant, I just wanna plan where my money is going to go over the next 12 months ;) Thanks, Tim -- Fedora Core release 4 (Stentz), Linux 2.6.13-1.1532_FC4 KDE: 3.4.3-1.0.fc4.kde, xorg-x11-6.8.2-37.FC4.49.2 08:20:04 up 7 days, 12:30, 2 users, load average: 0.68, 0.56, 0.43 MP3/OGG archive Total playlength : 7 days, 10 hours, 31 mins 30 seconds "It's what you learn after you know it all that counts" John Wooden
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