Future Liabilities

Keith Bellairs keith at bellairs.org
Fri Jul 4 19:22:54 EDT 2008


The amount you are saving ahead is a "reserve". You still have the money and
it is still an asset of yours, though you are earmarking it for what you
expect to spend it on. Here is a way to record transactions using an asset
account as a reserve:

Payday
Cash 500 (debit)
Food reserve 200 (debit)
Income 700 (credit)

Buy some food day
Food expense 50 (debit)
Food reserve -50 (credit)

If your food reserve gets to zero, you may have a problem.

A trick that has been recommended for gnucash users is to make the food
reserve a sub-account of your bank account.
Payday
Bank 500 (debit)
    Food reserve 200 (debit)
Income 700

that way the rolled up total for your bank account includes your food
reserve and should actually match the amount you have in the bank. Useful if
you want to reconcile your account with the bank;s statement.

Keith
Guelph ON

On Fri, Jul 4, 2008 at 5:04 PM, Mike or Penny Novack <
stepbystepfarm at mtdata.com> wrote:

> Alan Milnes wrote:
>
> >
> >Anyway my question is this - when I get paid I want to set some money
> >aside for certain expenses I know i will incur e.g. Food, Entertainment.
> >I need to allocate this on payday and then effectively "draw against" it
> >during the month, whilst being able to track my real current (checking)
> >account balance i.e. take into account any unspent money in these
> >categories.
> >
> >I thought of something like this but it seems very long winded and I'm
> >not sure how to then report my true available funds:-
> >
> >On payday
> >Expenses:Food -150
> >FutureSpend:Food +150
> >
> >When spent
> >CurrentAccount -150
> >FutureSpend:Food -150
> >Expenses:Food +300
> >
> >Thanks for any hints or pointers.
> >
> >
> >
> I'd do it this way. Change your current account so that it contains two
> sub accounts. One for "future expenses" and one for uncommitted. The
> parent account will show the correct balance (the sum of the balances of
> the two sub accounts). When you actually buy the food is when it becomes
> an expense. You'll split your deposits between these two sub accounts
> according to how much you are "reserving". Obviously you could have more
> than two sub accounts if you feel you need to track more closely.
> If at some time you discover that you have either too much or two little
> in the "reserve" you do a transfer transaction.
>
> Michael
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