Bank account vs assets issue

Doctorcam cam at
Tue Mar 14 09:24:13 EST 2006

* Wouter van Marle (wouter at wrote the following:
> 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
> 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.
> Any suggestions on how to handle this?

Yes.  Show the money you are holding for the other company as a
Liability.  Your Bank account should show the total cash there (that
obviously includes the other company's cash).  You owe the other
company that cash, and thus it is a liability.  If you want to show
the expenses against the other company as separate from the cash, then
set it up this way:

 - Liabilities
    -- Other Company
       -- Cash held for other company
       -- Expenditures made on behalf of other company

The Expenditures must be oppositely signed from the Cash held.  The
Other Company parent will then show the net amount owing, either way.
This is known as a contra account.  Very handy.



Cam Ellison  Ph.D.  R.Psych. #01417

Cam Ellison & Associates Ltd.
Management Psychology

RR 22    3446 Beach Avenue
Roberts Creek  BC  V0N 2W2

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