Accounting best practice question

[Adam Funk]

On 2007-02-02, Eric Ladner wrote:

> As an example, I do computer maintenance on the side for the lady that
> runs the daycare where my children are.  If a hard drive dies, I'll
> buy a new one from NewEgg or something, then she pays me back my
> expenses (I don't charge labor).  So, I've got a 40 dollar transaction
> that I need to zero out (from my point of view, no money changed
> hands, but I still need to record the transaction).  Where would the
> balancing transaction come from?  I think in Quicken, there was a
> generic "money in" that was an untracked source for cash.  The credit
> is something that comes externally and I don't care about tracking the
> credit...
>
> what's the best way to accomplish this without setting up a bazillion
> accounts that all show up under my account tree for money that I don't
> want to track?

I can think of two ways to do it:

(1) Create an Assets:Receivable:<name> account for the person.  I have
    a few of these for people that occasionally owe me money, and one
    for business expenses (that my employer will reimburse).  (I
    briefly looked at the accounts receivable system in GnuCash and
    decided it was too complicated for my needs.)

    This also lets you see at any time how much money she owes you.
    But it's a matter of personal taste whether this violates your
    "bazillion accounts" limit. ;-)

    Mon: Bought HDD for Mrs Smith
         Cr $40  Assets:Cash
         Dr $40  Assets:Receivable:Ms Smith

    Tue: Got money for HDD from Mrs Smith
         Dr $40  Assets:Cash
         Cr $40  Assets:Receivable:Ms Smith


(2) Charge the purchase the way you normally would, then cancel it
    when you get the money back.

    Mon: Bought HDD for Mrs Smith
         Cr $40  Assets:Cash
         Dr $40  Expenses:Computer hardware

    Tue: Got money for HDD from Mrs Smith
         Dr $40  Assets:Cash
         Cr $40  Expenses:Computer hardware

    You also use this idea if, for example, you bought a pile of
    computer hardware for yourself and later re-sold some of it.

    Mon: Bought a bunch of stuff
         Cr $100  Liabilities:Credit Cards:Visa
         Dr $100  Expenses:Computer hardware

    Wed: Deposited a cheque from Mrs Smith for a hard drive at cost
         Dr  $40  Assets:Bank:Main account
         Cr  $40  Expenses:Computer hardware


Personally, I'd use (1) for things bought specifically for someone,
and the second half of (2) for things bought for myself but resold.