A negative asset is effectively a liability. It is part of a concept
called 'contra' accounts. You can have contra-liability accounts too,
that are effectively assets.
Asset - normally a Debit balance - amount you own.
Contra-Asset - Credit balance - amount you owe someone else. (liability)
Liability - normally a Credit balance - amount you owe.
Contra-Liability - Debit balance - amount someone owes you. (Asset)
Our replies I'm sure got crossed. I go into more specific detail for the
posted use case, but essentially, I'd do it the same way - post the
pre-payment to AR, then apply it after posting an invoice when I do the
work.
Regards,
Adrien
On 7/12/22 9:29 PM, David Long wrote:
Hi,
one way I know works, but is a bit ugly, is to create your prepayment
account as a negative current asset. I do something similar as some members
of a club incur expenses on its behalf, which goes to their current account
as a negative asset, and I then use this to clear off invoices in their
receivable account using the invoice payment process which is equivalent to
your item 4 below.
Ugly though, as on the balance sheet report the current accounts not yet
cleared of to A/R appear as a negative asset rather than in the liability
section.
Regards
David Long
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