insurance car loan

[Cam Ellison]

Ethy H. Brito wrote:
> Hi all
> 
> I am still confused about this double entry thing (Duuhh!).
> 
> Here is the deal: my insurance company divides my car insurance ($1000) in 10
> payments ($101). 
> 
> How do I account the initial amount hired? What are the two accounts involved?

I'm no accountant, but I think it's best to show each payment as an 
expense, splitting it to show $100 as Expenses:Auto:Insurance, and $1 as 
Expenses:Interest.  Don't worry about getting fancy.

If you really want to show it as a decreasing liability, you will need 
to set up a liability account (it appears that you have done this), and 
show the whole expense (Expenses:Auto:Insurance - $1000) matched to 
Liabilities:Insurance.  Then each month, debit your chequing account (or 
whatever you are using to pay it) by $101, using a split to apply $100 
to the liability and $1 to interest.

Cheers

Cam


-- 
Cam Ellison, Ph.D. R.Psych. #1417

Cam Ellison & Associates Ltd.
3446 Beach Avenue
Roberts Creek BC      V0N 2W2
Phone:           604-885-4806
Fax:             604-885-4809