Don't understand imbalance

Harold hh6199 at
Fri Nov 21 17:15:51 EST 2008

Thanks, Robert. Let's quit this thread. Even my head is hurting from confusion. I will have to do some reading from the manual about Gnucash. I have used QB for several years and have never used liabilities and accounts payable. Of course since I am more familiar with QB then splits don't seem to be as hard. New softwar means learning new ways of doing things.


--- On Fri, 11/21/08, Robert Heller <heller at> wrote:
From: Robert Heller <heller at>
Subject: Re: Don't understand imbalance
To: hh6199 at
Cc: stepbystepfarm at, gnucash-user at, "Robert Heller" <heller at>
Date: Friday, November 21, 2008, 3:37 PM

At Fri, 21 Nov 2008 13:15:36 -0800 (PST) hh6199 at wrote:

> The way I have been doing it goes along with my thinking this way:
> I make several purchases with my credit card. This represents money
> from my bank account but it hasn't been taken out yet. When the bill
> comes in then I take the money from checking and pay the credit card
> bill and allocate the different purchases to the different expense
> accounts. 

Actually is is NOT 'money from my bank account but it hasn't been taken
out yet', it is in fact money you *borrowed* from the credit card company.
And you did in fact 'spend it' when you bought the items in question.
Just because you pay off your balance every month it is no less an act
of borrowing.  The credit card company considers each transaction as a
separate transaction and should you ever decide to set up the on-line
banking interface (or simply start downloading OFX files from your
credit card company and/or bank, that is how it will look in the OFX
files.  Doing something else will only make things harder.

> I am not arguing and definitely am not an accountant, but I don't see
> the need to go through two more steps of posting the purchases in
> liabilities or accounts payable and then having to relieve those
> accounts. To me, my way cuts out a couple of unneeded steps for my home
> finances.

You are not really saving steps here, instead you are collecting them
together in a large, complex, and confusing split. It might seem like more
steps, but it is really the same amount of work. It is also simplier and
less complex.  I.e. instead of 4-5 one-line transactions, you have one 4-5
line split transaction.  It is a '6 of one, half a dozzen of the other'

> I will just delete the transaction and re-enter it and post back what
> I have then.
> Harold
> --- On Fri, 11/21/08, Mike or Penny Novack
<stepbystepfarm at> wrote:
> From: Mike or Penny Novack <stepbystepfarm at>
> Subject: Re: Don't understand imbalance
> To: hh6199 at
> Cc: gnucash-user at
> Date: Friday, November 21, 2008, 1:24 PM
> Harold wrote:
> > I don't record the credit card charges as I incur them. I
> use liabilities and then pay them. As I understand accounting (not very
much) I
> am operating on a cash basis and therefore just pay the bills when then
come in
> and are due.
> > 
> Confusion as to what is meant by "cash basis". Concepts like
> "accounts receivable" and "accounts payable"
> limited to "accrual bookkeeping".
> Perhaps the confusion is because you used the card for the purchase of
> goods of some sort? Try this example. Using your credit card, you go to an
> and obtain money. You wouldn't think of this as if it were income,
> you? Yes it's an increase in assets (cash in pocket) but it's also
> increase in liabilities (credit card balance). When did you experience
> increase in cash in pocket? When you took it from the ATM or when you
> wrote a check to pay the credit card bill? It wasn't the same as if
> waited to the date at which you later paid the bill, walked into the bank,
> cashed a check was it?
> The same with the expense side. You buy something with the credit card
> of with cash from pocket or check from checking account. You bought it
when you
> bought it, not later when you paid the bill. In between you owed somebody
> Accrual bookkeeping is something else.
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Robert Heller             -- Get the Deepwoods Software FireFox Toolbar!
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