Bank account vs assets issue
warlord at MIT.EDU
Tue Mar 14 10:45:26 EST 2006
Wouter van Marle <wouter at squirrel-systems.com> writes:
> Hi all,
> I've a problem calculating assets of my small business properly. The
> issue at hand: I'm running an office on behalf of another company (not
> owned by me), and share this with my own company. As I do not have
> access directly to the money of this other company, I take care of many
> expenses related to running the office (rent, utilities, coffee,
> whatnot). Once a month or so I invoice this to the other company.
> Now the problem is that I can not properly calculate the assets of my
> own company, and in the same time have a correct bank account. A snippet
> of my account tree:
> - Assets
> -- Bank account
> -- Expenses/income my company
> -- Expenses/income other company
Um, Expenses aren't Assets. They don't belong here.
> Now the balance given in "Bank account" is an accurate statement of the
> cash at hand - very important. But the Assets total is not only the
> assets held by my company, it also includes the balance held by me of
> the other company, which (positive or negative balance) is not my money,
> and therefor should not be included in my assets.
I can't see how it could ever be an accurate statement with the
"Expenses" under it.
> Any suggestions on how to handle this?
Um, search the archives -- this has been discussed numerous times.
You want to use a split transaction. You need three accounts:
Let's say you buy an item for $1000 and the "cost" is shared by both
companies equally. When you make a purchase for a shared item, you
account for it as:
So your checking account has gone down by $1000, but it's only a $500
expense to YOU. The other company now owes you $500 for their share
of the item. When they pay you that money, you just transfer that
$500 back into your checking account.
Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
Member, MIT Student Information Processing Board (SIPB)
URL: http://web.mit.edu/warlord/ PP-ASEL-IA N1NWH
warlord at MIT.EDU PGP key available
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