Credit Balance on new Expense Account

[Tad Marko]

I think that method 1 is similar to the other suggestion I got here
and seems to be the best way.

Is my understanding of the normal handling of expenses correct?

Tad

On Fri, Jan 12, 2007 at 12:37:47PM -0500, Derek Atkins wrote:
> Well, you can do it two ways..
> 
> 1) Against Eq:O-B..  Then as you eat up the credit you just make bills
>   against Eq:O-B in the other direction until all the credit is eaten up.
>   Then you continue on from A:Checking
> 
> 2) Make an Asset Account for the opening credit, and have your bills
>   come from that Asset account until the credit is used up.  Then continue
>   from your checking account.
> 
> Either way works.  IANAA so I dont know if one way or the other is more
> GAAP than the other.
> 
> The key is making sure the transactions flow in the correct direction.
> 
> -derek
> 
> Quoting Tad Marko <tad at tadland.net>:
> 
> >On Fri, Jan 12, 2007 at 12:21:35PM -0500, Derek Atkins wrote:
> >>Nah!  Just record it against Equity:Opening Balances
> >>
> >
> >OK, so then the account will have the correct 1/1/2007 balance, but
> >then how do I indicate debits against that balance in that one
> >account? Maybe my understanding of expense accounts is flawed:
> >
> >What I think is that under normal circumstances, I get my phone bill
> >and I pay it out of my checking account. I put, say, a $35.00 debit in
> >the checking account to the telephone expense account. One entry in
> >two places, a negative in the checking account and a positive in the
> >telephone account. Am I done, or did I need to somehow put a negative
> >in the telephone account so its balance stays zero? Or does its
> >balance increase all year, reflecting the sum of my telelphone
> >expense?
> >
> >Thanks,
> >Tad
> >
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> 
> 
> -- 
>       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
>