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I still don't have the clarity on the accounting entries that will be passed when a transaction related to a off-balance sheet items is done.
In the example: Pledged assets (I assume this is from clients of something like a pawn shop).
When a customer pledges a gold chain and takes a loan of 4,000 - there are 2 transactions that happen.
a) The loan of 4,000 being disbursed in cash
b) The gold chain being given to the pawnshop. Actual value of gold chain was ascertained at 5,000.
Transaction a) is straight forward:
Client Loan Portfolio Account Dr. 4000
Cash account credit Cr 4000
Transaction b) A probable way of handling it in Mifos:
Use accounting tags to classify off-balance sheet items.
Example - define tags called "Off-Balance-Sheet Asset" and "Off-Balance-Sheet Liability" (tags can be defined using Code-Values - Under "Asset Account Tags", "Liability Account Tags" etc.
Create asset and liability accounts and associate them to these tags.
Pledged Gold (Asset)
Redeemable Pledged Items (Liability)
Pass the following transaction:
Pledged Gold Dr 5000
Redeemable Pledged Items Cr 5000
Customize financial accounting reports to ensure that accounts related to these tags are appropriately handled in the report - by excluding them as line items and/or summarizing them as notes in the reports.
Each off-balance sheet item can be similarly handled.
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