Credit Balance on new Expense Account

[Ariel]

On Fri, 12 Jan 2007, Tad Marko wrote:

> On Fri, Jan 12, 2007 at 03:03:10PM -0500, hendrik at topoi.pooq.com wrote:
>> On Fri, Jan 12, 2007 at 12:36:07PM -0500, Ariel wrote:
>>> Option 2:
>>>
>>> Put a negative opening balance (dated 12/31/06) into your telephone
>>> account, then set gnucash to show you data starting from the beginning of
>>> the year.
>>
>> I'd pick option 2 -- isn't a negative balance just what would normally
>> result from an overpayment?
>>
>> -- hendrik
>
> I thought I was understanding the suggestions better than I apparently
> am...
>
> If I put in a negative opening balance, where does that come from?
> Opening balance equity account?
>
> Having done that, how do I enter the next bill that should debit
> against that balance? I can't just put it in the account without tying
> it to a source account. Do I use Equity:Opening Balance for that too?

Yes to both.

That's one answer, the other possible answer is:

You don't. No money actually moved out of your hands, so no money is 
entered into gnucash.

It depends on how you do/did it:

You can enter the starting balance as a Rebate (dated Dec 31), and then 
transfer to Equity:Opening Balance each month as you get a bill.

Or, you can enter it dated Jan 1, as a Expense, in which case you've 
pre-billed yourself for phone expenses, so you do nothing until money 
actually moves out of your hands.

Each has it's drawbacks, the first will show your total expenses wrong 
(unless you ask just for the total from the start of year), the other will 
not show you the correct monthly expense. (I still recommend option 3 - 
don't enter the overage at all, and each month transfer from E:O B. 
Manually keeping track of things till you use up the overage.)

The correct GAAP way to it is like this:

Are you tracking your balance at the phone company, or are you tracking 
your phone expenses?

You are tracking both.

One is an accounts payable (A/P) account, the other is an expense (E) 
account. You would enter the overage as a Pre-Payment on the A/P, then 
each month you transfer between A/P and E, and when A/P shows you owing 
money you transfer from checking to A/P (and send a check).

However this is usually too much work for a home user.

 	-Ariel