Accounting Question

[John Edwards]

On Wed, Jan 27, 2010 at 7:46 PM, David T. <sunfish62 at yahoo.com> wrote:

> I am trying to figure out how to track something in Gnucash, and I ask for
> some advice.
>
> I received a $1000 loan from a group (NiceGuys) to help pay an expense to a
> provider (ServiceGuys). NiceGuys paid ServiceGuys directly, without me
> seeing the money at all. I am trying to grok the transactions in Gnucash.
> Right now, I have $1000 transferred from Liabilities:NiceGuys to
> Equity:Other, just so the loan can appear somewhere. But the $1000 paid for
> one of my expenses, so should I instead change the transaction from
> Equity:Other to Expenses:ServiceGuys. When I do that, it looks right in that
> account, but I wanted to see whether I was missing something...
>

Nope, you've got it right.

The entry is:
DR Expenses:Service Guys 1000
CR    Liabilities:Nice Guys           1000

That will increase your Expenses:Service Guys account by $1,000, and also
your Liability:Nice Guys account by the same amount. That is the effect that
you want.

Service Guys and Nice Guys will each have transactions involving their cash,
but you don't.

It is not uncommon to have expenses go directly to liabilities. Interest
expenses are the classic example.

When you repay the loan, you will credit your Cash and debit your liability
by the appropriate amount.

If you had seen the money, then you would have had two transactions:
DR Cash               1000
CR   Liabilities:NG      1000

DR Expenses:SG  1000
CR     Cash                  1000

That would have recorded the money passing through your account, and then
leaving. Without the money passing through the account, the one-entry
treatment is correct..

John Edwards