Advanced Budget Report Question

Tue Jan 19 21:18:15 EST 2010

Ben,
For the record it is a pretty good report, and has helped me to see an amount as I plan my budget. One thing that could possibly work out is maybe a separate table for planned/budgeted amounts for Assets and Liabilities and the user could do the math them self to whatever effect worked best for them.

Assets
======
401k      				$1000.000
Savings Goal 1		$300.00
===========================
Total				$1300.00

Liabilities
========
Credit Card 1		($100.00)
Credit Card 2		($500.00)
===========================
Total				($600.00)

I tried to figure out how to modify the report, but I developed a few gray hairs and slight frustration. So, I enter the amount from the checking account to the liability account, and then the accounting rules get blurry -> I then adjust the split adding the same amount to an expense account letting the rest go to Imbalance. The objective I guess a lot of people would have is getting all of their budgeting information on one page/report with the math completed. 

Thanks,

Andre Powell
apowell656 at gmail.com

On Jan 19, 2010, at 8:37 AM, Benjamin Johnsen wrote:

> Andre,
> 
> It is good to hear that you are using the report.  After I submitted I hadn't heard anything more and figured it was a dead end.
> 
> I might have a few updates but they would be graphical and maybe a few calculations bugs that show up around the end of the year.  I will have to see what version I submitted to know what issues I might have fixed.
> 
> I have talked to a few people about the Asset and Liability issue in relation to a budget.  Again these people aren't CPAs but they run small businesses and they have some pretty good insight into how the books are done.  They seemed to say that updating Assets and Liabilities was a Year End activity.  Their recommendation was to create an Expense account and at the Year End when you close it out it would get moved to the Liability there by reducing the Liability.
> 
> I don't know if you do you a Year End close out but as I understand it at the end of each year you should close out all of your Expense and Income accounts.  Basically get them back to 0.  The way I understand to do this is by creating an Asset account named for the year. Something like "2008 Year End".  I then transfer all of my Expense and all of my Income to that Asset account.
> 
> So if I take a mortgage as an example.  I am going to do a simple example and ignore closing costs and taxes and any other things that could go along with a mortgage.  This just deals with the mortgage payments.  I have 4 accounts.  1 Liability (Mortgage Principle), 1 Asset (Value of the House), 2 Expense (1 Interest Payment, 1 Principle Payment).
> 
> I then have a transaction from the Liability to the Asset account for $80,000 this give that Asset its value if a down payment was made then another transfer would be made from another Asset account to the House Asset account.  Then as the year goes on payments on the mortgage are made every month.  Charge those payment to the Interest and Principle Expense accounts accordingly.   At the end of the end of the year there is $10,000 in the Interest Expense account and $5,000 in the Principle Expense account.  The Year End close out process for the Interest Expense account a transaction would be created that would transfer $10,000 from the Interest Expense account to the newly created "2008 Year End" Asset account.  To close out the Principle Expense account a transaction for $5,000 would be created to transfer $5,000 from the Principle Expense account to the Liability account for the loan there by paying down the loan.
> 
> The advantage to doing things this way is that through the year all of your Liability payments are tracked as an Expense and can be included in the budget report.  The down side is that if you want to look back at a previous year's budget the numbers will be messed up because each Expense and Income account will have been closed out.  I haven't found the downside to be that big of a deal because when I close out an account I have a total amount that I spent for that year which is normally all I ever need.  From the total number I can then plan for the budget for the next year or see how my spending has gone up or down year of year.
> 
> So in short I agree with Forest and would like to keep Liabilities out of the report.  I will see what updates I have made since I last submitted to GnuCash and see about submitting a new version.
> 
> Thanks,
> Ben
> 
> On Fri, Jan 15, 2010 at 8:56 AM, apowell656 at gmail.com <apowell656 at gmail.com> wrote:
> Forest, 
> I agree with your response and I am not interested in changing any rules of finance. A simpler solution from how the current report is built would be to add another section for assets and liabilities, based on the BBS layout and formula. A user could either project for either or just one (me personally would just like to see liabilities I am paying for).
> 
> This would address the fact that currently there is no way to project a balanced budget without exporting the info to a spreadsheet or manually calculating the information. Where in my opinion both of these options are more time consuming whether at setup(spreadsheet) or at the time of (calculator) .
> 
> Needless to say my wishlist would be one of the following; if there is a way to actually pay on a liability and to get it to report as an expense that would be all the better for this report, or GnuCash to actually show the totals in the built in report so a user could get the info from one screen.
> 
> Best regards,
> Andre Powell
> (This is the first long email I have written on my Eris and not so bad of an experience)
> 
> ----- Reply message -----
> From: "Forest Bond" <forest at alittletooquiet.net>
> Date: Thu, Jan 14, 2010 10:36 PM
> Subject: Advanced Budget Report Question
> To: "Andre Powell" <apowell656 at gmail.com>
> Cc: <ben.johnsen at gmail.com>, <gnucash-devel at gnucash.org>, <gnucash-user at gnucash.org>
> 
> 
> 
> Hi,
> 
> On Thu, Jan 14, 2010 at 07:33:08PM -0500, Andre Powell wrote:
> > I think that it would be fair to say that if I would decrease an asset in my
> > budget it would be an expense (towards something) and if I increased it would
> > go towards income. Regarding a liability much the same if I decreased it would
> > be an expense, and increased it would be "income", although obviously debt.
> > Although, I am no CPA I do not have an "official" answer, but it makes sense
> > to me. In a more simplified way, and the way I think that most people would do
> > a budget count the payments to a liability as an addition to your expenses and
> > the math will roll on from there. 
> >
> > With all of that said, what are the odds of you adding Liabilities to the
> > report with them impacting expenses. :-) 
> 
> I would very much prefer assets and liabilities to not be handled this way.
> 
> It is not consistent with current handling in the Budget Income Statement (BIS)
> and Budget Balance Sheet (BBS) reports.  BIS only looks at income and expense
> accounts.  BBS assumes that positive values entered for assets are savings and
> therefore increase the value of those assets and that positive values entered
> for liabilities represent liability repayments and therefore decrease the
> liability.
> 
> If this interpretation needs to change, so be it, but I would really like to see
> some discussion and consensus before the behavior gets less consistent than it
> is now.
> 
> In any case, I think asset/liability values being somehow interpreted as
> income/expenses is wrong.
> 
> Thanks,
> Forest
> -- 
> Forest Bond
> http://www.alittletooquiet.net
> http://www.pytagsfs.org
> 
> 
> 