Cash vs Accrual Accounting and Cygwin/X

[Derrick Hudson]

On Tue, Jan 10, 2006 at 04:25:30PM -0500, Derek Atkins wrote:
| Quoting Andrew Sackville-West <andrew at farwestbilliards.com>:
| 
| >I don't use cash accounting, but seems to me an organized person can 
| >just post the invoice on the day they PLAN to pay it and then just 
| >remember (heh) to pay iton that day. maybe post it with a posting and 
| >due date set the same. I don't know, just ideas.
| 
| That doesn't work when the 'payment' is incoming..  You have no idea when
| a customer is going to pay you.  But you want to keep the posted invoice
| on the books so you remember that you are owed the money.

As far as tracking money that is owed ... here's the technique I've
been using for a couple years now.  Note that I am not a business (or
an accountant) and thus this may not work for real invoicing.

I have an account of type 'Expense' called "Placeholders" (with the
'placeholder' property set).  Under that I have expense accounts for
each person that may owe me money.  For some of them I break down the
category of the money owed (eg portion of phone bill or whatever).
When I pay for something that someone will owe me for, I use that
person's placeholder account instead of one of my own expense
accounts.  When they pay me back, it also goes to that expense account
to negate the balance.

Here's a simple picture of the accounts and two transactions:

Accounts:
    Assets
        [...]
    Expenses
        [...]
    Placeholders
        John Doe    (maybe a roommate, friend or relative)
        Jane Doh    (likewise)
        [...]

Transaction 1: purchase

   Date  Description   Account                Debit Credit
   ----  ------------  ---------------------  ----  -----
   12/3            
         paid bill     Checking                      40
         my portion    Expense:Foo            20
         other portion Placeholders:John Doe  20

This shows that I wrote a check for $40, $20 of it is my
responsibility and $20 is John's and thus he owes me.

Transaction 2: payment from John

   Date   Description   Account                Debit Credit
   -----  ------------  ---------------------  ----  -----
   12/20           
          deposit       Checking               20       
          for bill      Placeholders:John Doe         20

And now the balance on John's account is back to $0 meaning he doesn't
owe me.  This works just as well if I buy something at a store (credit
card) and deposit John's payment in my checking account.

This technique also works in reverse -- if someone else pays for
something and I owe them.  The transactions are mostly the same, just
switch the columns in trans #1 and apply it to an expense instead of
an asset account.  Then when I pay them back, the money comes from my
checking to that person's placeholder account.

Oh, and since I am using an Expense account, not an Asset, to track
what I am owed, the "net assets" summary doesn't include these
amounts.  That is probably good when you don't have the cash yet, but
probably bad when you owe someone (since then it says you have the
cash, but you've really already spent it).

-D

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