'Loans': Asset or Expense?

[Mike C.]

If I was doing this I would post the transactions to Accounts Receivable 
with sub-accounts if that makes it easier to identify the person that 
owes you.  Accounts Receivable is an asset account.
Mike

Phil Longstaff wrote:
> On June 15, 2009 05:06:02 pm Christopher Stamper wrote:
>   
>> Hello all,
>>
>> Sorry if this is a stupid question - I don't profess to be an accounting
>> expert. :-)
>>
>> I often find myself buying things for others, with the expectation that
>> they will reimburse me. Previously, I had been recording this as a 'gift',
>> and the reimbursement as 'other income'.
>>
>> Now, I'm starting to think this is a dumb idea. I want to have a record of
>> what I am owed, so should I:
>>
>> -Create an expense account, 'For Others', and post the expense+reimbursment
>> here
>>
>> OR
>>
>> -Create an assets account, and post the expense and re-imbursement?
>>
>> I have been using method 2 for large loans to single individuals. However,
>> for this I want to have one catch-all account; anything else would be too
>> cumbersome.
>>     
>
> Money that is owed to you is an asset.
>
> When I worked in a financial office, we had the rule that it was much better to 
> separate out details using the chart of accounts, rather than have to scan 
> through the transactions in an account.  If you use a single account which has 
> transactions for things you buy and reimbursements, and want to know how much 
> a particular person owes, you will need to scan through and isolate 
> transactions for that person.  Therefore, you might want to have 1 sub-account 
> per person.  The parent account (which should be a placeholder) will show you 
> how much you are owed, and the individual sub-account balances will show you 
> the balance for any particular person.  
>
> Phil
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