Mortgages?

[Stephen Walton]

On Sun, 4 Feb 2001, Jason Rennie wrote:

>
> dank@alumni.caltech.edu said:
> > Or should it be -1 times the principal owed?
> > Or should there be two accounts - 'mortgage interest' and 'mortgage
> > principal'? And must I manually split each payment?
>
> That would be the proper way to do it---to have a liability account for
> the principal and an expense account for the interest.  Each payment
> subtracts from your checking, adds the principal part to your mortgage
> liability account (hence reducing your liability) and adds the interest
> part to your expense account.

I appreciate the clear explanation of what should go on here.  However, it
conflicts with another desire of mine and perhaps an accountant could
share some insight.  When gnucash calculates a 'profit and loss' report,
it seemst o consider loan payments (transfers to a liability account) as a
zero contribution to that report.  However, my mortgage principal payments
"feel" like an expense to me, in that they deplete my checking account.  I
know that decreasing my mortgage balance increases my net worth, but I
need something more like a 'cash flow' report.  Old faithful PHASAR on the
Amiga could mark an account such as a mortgage account as a 'cash flow'
account, meaning that transfers to that account showed up as a negative
cash flow rather than as a zero contribution to cash flow.

Am I making myself clear?  Probably not, but I hope someone gets the
idea...

---
Stephen Walton, Professor of Physics and Astronomy,
California State University, Northridge
stephen.walton@csun.edu