I think you will find that every accounting package in the world includes a sixth category for bank accounts. Probably for the reason you give. If a bank account gets overdrawn then you would suddenly have to change it from an asset account to a liability account.
You are right that what you describe has nothing to do with equity. If I understand you correctly, Company 1 and Company 2 can change from being a net creditor to a net debtor and vice versa at any time. If this is the case then you really need to leave an audit trail rather than rely on sed to create a report that doesn't exist for your business. This just means that at the appropriate time (like when you have to submit a report to the tax man), you need to make an adjusting entry. For example, If Company 1 has a net liability account balance of +$500 (meaning that it has become a net asset) then you would make the following entry : 2019/10/10 * Company 1 Liabilities:Accounts Payable $ -500.00 Assets:Accounts Receivable $ 500.00 I am sure that such adjusting entries would only have to be made a couple of times per year and don't represent any hardship for you. On Thursday, October 10, 2019 at 8:51:22 AM UTC+8, Remco Rijnders wrote: > > Hi, > > Thank you for this and I think I hear what you are saying. That said, I > still think it is not an elegant solution. In my view, the Equity account > should be solely the owners equity or an individuals net worth. Creating a > seperate Bank category would also not be my preference as I'd like to > stick to the five account categories in general use (See: > > https://en.wikipedia.org/wiki/Debits_and_credits#The_five_accounting_elements > ). > > Maybe I used somewhat incorrect terminology in my original post, in my > situation it pertains to the credit/debit position on an account between > two related companies. The credit position on that account at company 1 is > reflected as a debit position on an account with the same name and > characteristics at company 2. Any debit mutation is immediately netted > with an existing credit position and vice versa. I could use the booking > rules as you propose, but then I would always have to do the netting > myself by adjusting Accounts Receivable whenever I adjust Accounts > Payable which also seems cumbersome. > > Perhaps what I am looking for, just isn't on offer in ledger? I could > live with that just fine, but thought I would ask anyways :-) > > Kind regards, > > Remco Rijnders > -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To view this discussion on the web visit https://groups.google.com/d/msgid/ledger-cli/937a3b6f-18aa-4269-ab3d-19f73053126e%40googlegroups.com.
