Re: [GNC] Credit Card Format Good?
> For example, ... if you paid with the credit card would be db expense; cr > credit card. > > Then when you pay against credit card charges might be: > 1) balance paid in full, no interest - db credit card; cr checking > ... > Michael D Novack > > Possible duplicate. Thank you, Mike. I'm enjoying the discussion, but you've answered my question. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Credit Card Format Good?
On 2019-09-16 08:54, Mike or Penny Novack wrote: > On 9/15/2019 10:01 PM, Peter West wrote: >> . That means that increases in an Asset are debits, while decreases >> are credits; and increases in Liabilities (or Equity) are credits, >> while decreases are debits. >> >> Income increases assets; an increase in an asset is a debit; therefore >> the balancing entry for income must be a credit. >> Expenses decrease assets; a decrease in an asset is a credit; >> therefore the balancing entry for expenses must be a debit. >> > Not necessarily, and that needs to be stressed precisely because this > began with credit cards. > > An income item will increase assets OR decrease liabilities << in either > case, a debit >> Hmm. I know what you mean, but I would not say it this way because it could be read as "an income item is a debit." It might be helpful to be more explicit: An income item is a credit. Because each transaction must be balanced, the item that balances an income item must be a debit. That debit is typically an increase to an asset (for instance cash), but it could be a decrease to a liability (for instance debt, because if someone forgives a debt you owe that forgiveness is income to you). A special point about credit cards, since that is wherte this thread started ... Your credit-card balance is a liability, so when you make a purchase that is a credit to Liabilities:Whizzo Credit Card and increases the balance in that account, balanced by a debit to an asset or expense account which increases the balance in _that_ account. When you make a payment, that decreases the balance in that account, and therefore it is a debit to that account, balanced by a credit to Assets:Cash, which reduces the balance in _that_ account. This point is often confused, because when you make a return or payment you get a credit slip, not a debit slip as you might expect. Thus, before we learn bookkeeping, we get used to thinking that "a credit to my Whizzo Credit Card" is a good thing, but this is actually backward. In fact, while your credit account is a liability on your books, it is an asset on the merchant's books. A return or payment reduces the merchant's asset balance and is thus a credit as far as the merchant is concerned, but it reduces _your_ liability and is thus a debit as far as you are concerned. Thus debits and credits balance not only within one set of books but between the books of different entities! -- Regards, Stan Brown Tompkins County, New York, USA https://BrownMath.com http://OakRoadSystems.com ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Credit Card Format Good?
On 9/15/2019 10:01 PM, Peter West wrote: . That means that increases in an Asset are debits, while decreases are credits; and increases in Liabilities (or Equity) are credits, while decreases are debits. Income increases assets; an increase in an asset is a debit; therefore the balancing entry for income must be a credit. Expenses decrease assets; a decrease in an asset is a credit; therefore the balancing entry for expenses must be a debit. Not necessarily, and that needs to be stressed precisely because this began with credit cards. An income item will increase assets OR decrease liabilities << in either case, a debit >> An expense will decrease assets OR increase liabilities << in either case, a credit >> For example, if you paid an expense with a check, db expense; cr checking but if you paid with the credit card would be db expense; cr credit card. Then when you pay against credit card charges might be: 1) balance paid in full, no interest - db credit card; cr checking 2) if interest part of that payment a split db credit card, db credit card interest; cr checking (you might instead choose to have entered the interest as a credit card transaction first) Michael D Novack ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Credit Card Format Good?
In addition to the info David & Peter offered, I see an issue with the ‘Bills:Credit Card Charge’ account. That shouldn’t be there. Bills that you owe *are* your liabilities. Normally, recurring bills like utilities, phone, tv, and rent would fall under ‘Accounts Payable’ which is a Liability account. Recurring bills don’t need individual accounts to track them. (you don’t need to use the business features to use this account, but never mix manual and business feature entries there, if you need to use the Business Features *and* make manual AP entries, create an ‘Other Accounts Payable’ account and do the manual stuff there) Other liabilities like mortgages and auto loans would each have their own liability account, as would each credit card because they are longer term and in the case of cards, ongoing. There is no need for a ‘Bills’ top level account. When you purchase something using the card it would look like: Dr. Expenses:(relevant expense account here)$5 Cr. Liabilities:Credit Card $5 Your column labels might be ‘Payments’ and ‘Charges’ if you aren’t using formal labels, otherwise, they will be ‘Debits’ and ‘Credits’ This will increase the amount of that expense account and increase the liability owed on the credit card. When you make a payment on the card balance, say when you get your monthly statement, that would look like: Dr. Liabilities:Credit Card $100 Cr. Assets:Checking $100 This will decrease the liability owed on the credit card and decrease the amount in your checking account. This is what you have for Entry 2 (I’m not sure what the example before entry 1 is, but if you follow the Help & Guide and the advice of David & Peter, you wouldn’t be using a credit card expense account anyway.) Note, when you reconcile a credit card account, GnuCash will offer to enter an interest charge for you, as well as enter a payment transaction. (since many people pay on their account when they reconcile) You can use these helpful features, or do those manually as you prefer. Regards, Adrien > On Sep 15, 2019 w38d258, at 8:03 PM, > wrote: > > I've just recently started with GnuCash and decided to treat credit cards as > liabilities rather than expenses as I did previously. To that end I've > migrated my accounts, but since I don't know how the result should appear I'd > like to ask if I have it done properly. > > Right now I've set it up simply, without tracking individual purchases, but > if I've done it right, I can begin to track individual purchases next month. > > Expense:Credit Card Charge Account > Expense:Credit Card (Column "Tot Expense") $5 > Liabilities:Credit Card-L (Column "Tot Rebate") $5 > > Liabilities Account > Entry 1 > Credit Card-L Account > Bills:Credit Card Charge (Column "Payment") $5 > Liabilities:Credit Cards - L (Column "Charge") $5 > > Entry 2 > Credit Card-L Account > Liabilities:Credit Cards - L (Column "Payment") $5 > Checking account (Column "Charge") $5 > > Expenses no longer balance; Liabilities balance, but I suppose they would if > I'd done it completely backwards. Is this done properly or backwards? ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
Re: [GNC] Credit Card Format Good?
Hi, I can’t be of much help, because my accounts setup is different from yours, but if you run Reports > Assets & Liabilities > Balance Sheet, the Balance Sheet will show total assets, total liabilities and total equity. It also shows the sum of Total Liabilities and Total Equity. The sheet is in balance if this last sum is equal to Total Assets. That is, if Assets = Liabilities + Equity. That is the basic accounting equation of double-entry book-keeping. In order to balance, the sign (+ve or -ve) of the Asset accounts must be the opposite of both Liabilities and Equities. By convention, the Assets are debit accounts, therefore the Equity and Liability accounts must be credit accounts. That means that increases in an Asset are debits, while decreases are credits; and increases in Liabilities (or Equity) are credits, while decreases are debits. Income increases assets; an increase in an asset is a debit; therefore the balancing entry for income must be a credit. Expenses decrease assets; a decrease in an asset is a credit; therefore the balancing entry for expenses must be a debit. I’m not sure about your Expense, Rebate, Payment and Charge columns, but in my setup I could have Expenses: (Dr) Credit Card: Purchases: Charges: Cash purchases: Liabilities: (Cr) Credit Card Pending: Assets: (Dr) Cash at Bank: If I purchase fuel for cash, say $30, I would enter the transaction as a $30 debit under Expenses: Cash purchases, and a corresponding $30 credit (here a reduction) in Assets: Cash at Bank. If I purchase the same amount of fuel on my credit card, I would enter the transaction as a $30 debit under Expenses: Credit Card: Purchases, and a corresponding $30 credit (here an increase) in Liabilities: Credit Card Pending. Let’s say that is my total credit card bill, which I pay on time, without incurring interest charges (a common situation here in Australia.) I enter the payment transaction as a $30 credit (here a reduction) in Assets: Cash at Bank, and a corresponding $30 debit (here also a reduction) in Liabilities: Credit Card Pending. Notice that this final $30 debit in Liabilities: Credit Card Pending balances and nullifies the preceding $30 credit from the original CC purchase, leaving the $30 credit (reduction) in Assets: Cash at Bank and the $30 debit (increase) in Expenses, although now it comes under Credit Card: Purchases rather than under Cash purchases. This points out a problem with the arrangement of accounts. To track individual categories of expenditure, in this case fuel, I need to have two fuel expenses accounts: Expenses: Credit Card: Purchases: Fuel and Expenses: Cash purchases: Fuel. This is not a problem if you never buy any trackable items using cash, but in general you would just have something like Expenses: Transport: Fuel and your fuel expenses can be recorded directly against that account, whether you pay by cash (and enter a Cash at Bank credit) or by credit card (and enter a Credit Card Pending credit). Peter -- Peter West p...@pbw.id.au “Woe to you, when all people speak well of you, for so their fathers did to the false prophets.” > On 16 Sep 2019, at 11:03 am, > wrote: > > I've just recently started with GnuCash and decided to treat credit cards as > liabilities rather than expenses as I did previously. To that end I've > migrated my accounts, but since I don't know how the result should appear I'd > like to ask if I have it done properly. > > Right now I've set it up simply, without tracking individual purchases, but > if I've done it right, I can begin to track individual purchases next month. > > Expense:Credit Card Charge Account > Expense:Credit Card (Column "Tot Expense") $5 > Liabilities:Credit Card-L (Column "Tot Rebate") $5 > > Liabilities Account > Entry 1 > Credit Card-L Account > Bills:Credit Card Charge (Column "Payment") $5 > Liabilities:Credit Cards - L (Column "Charge") $5 > > Entry 2 > Credit Card-L Account > Liabilities:Credit Cards - L (Column "Payment") $5 > Checking account (Column "Charge") $5 > > Expenses no longer balance; Liabilities balance, but I suppose they would if > I'd done it completely backwards. Is this done properly or backwards? > > > > ___ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > - > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you
Re: [GNC] Credit Card Format Good?
To treat a credit card properly you will need to setup accounts .GnuCash has basic account types (Assets, Liabilities, Equity and Income and Expenses and the top level accounts in your Chart of accounts will normally have these names. Your credit card account is a liability and will appear as a subaccount of the Liability top level account. You may have other liabilities e,g, a loan as wellDepending on the complexity of your financial affairs you may create intermediate accounts but ignore that for the present. Sub accounts are usually represented with a colon as a separator hence a credit card account. Liability:CreditCard Similarly each of the other top level accounts will have sub-accounts representing expenditure and income you want to track and assets you may own or control ( bank accounts proerty etc). When you charge something to your credit card the entry ( ignoring date and description coumns) will look like (use the EDit ->Preferences_>Register Defaults->Auto-split Ledger set to view the transactions in a form similar to the presentation below and click on the transaction to view its splits. If this doesnt make sense read the Tutorial and Concepts Guide (https://www.gnucash.org/docs/v3/C/gnucash-guide/index.html) and the help manual https://www.gnucash.org/docs/v3/C/gnucash-help/help.html). The entries below are as they would appear when viewed from the register for your Credit Card account. The same transaction could also be viewed from the register for the Expense account (column names might be different) for the purchase transaction . Tot Payments Total Charges Liability:Credit Card $5 Expenses:Groceries $5 When you make a payment the money comes from your bank account e.g. Checking account and is used to reduce the liability Tot Payments Total Charges Liability:Credit Card $xxx Asset:Checking Account$xxx This transaction could also be viewed for the register for your Checking Accoun.It will be basically the same but the column header for payments and charges may be different in this register. You would not normally have an expense account for your credit card account, it is a liability not an expense. Your expense accounts are the things you commonly spend money on not the source of the funds used to buy them. You are close but not quite there. If you haven't read the guide section called the Basics it might help. David Cousens - David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
[GNC] Credit Card Format Good?
I've just recently started with GnuCash and decided to treat credit cards as liabilities rather than expenses as I did previously. To that end I've migrated my accounts, but since I don't know how the result should appear I'd like to ask if I have it done properly. Right now I've set it up simply, without tracking individual purchases, but if I've done it right, I can begin to track individual purchases next month. Expense:Credit Card Charge Account Expense:Credit Card (Column "Tot Expense") $5 Liabilities:Credit Card-L (Column "Tot Rebate") $5 Liabilities Account Entry 1 Credit Card-L Account Bills:Credit Card Charge (Column "Payment") $5 Liabilities:Credit Cards - L (Column "Charge") $5 Entry 2 Credit Card-L Account Liabilities:Credit Cards - L (Column "Payment") $5 Checking account (Column "Charge") $5 Expenses no longer balance; Liabilities balance, but I suppose they would if I'd done it completely backwards. Is this done properly or backwards? ___ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. - Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
