Pls help model this situation

[Derek Atkins]

jhw <johnhwoods+gnucash at googlemail.com> writes:

> Hi Jim, thanks a lot for your quick response.  It's probably because I can't
> get my head round basic accountancy principles, but I still can't seem to
> grok this.
>
> Does this mean that when I pay the farrier, I don't enter a transaction from
> Checking to Expenses:Horse but instead transfer the amount to A/R?  

Yes, because to you it isn't an expense -- you're expecting HIM to pay
it, so it's just a passthrough.  So you transfer from Checking to your
"A/R" (note that I wouldn't use a real A/R for this for you -- I'd just
create an Asset account called "Money Owed by RealDad").  So when you
pay the farrier on RealDad's behalf (which is what you're doing), you
would transfer from Checking to A:MObRD.

>     What
> happens then if he doesn't pay for that particular bill - do I transfer from
> A/R to Expenses:Horse?

If he doesn't pay the bill at all and you want to "write off" that
amount owed, then yes, you can do this. 

> What about owing child support?  I don't want to put an entry in my checking
> account because it's not something that decreases this balance - rather it
> is more like owed income - income I should have had but didn't get.  If I
> put Income:RealDad (it's _me_ that's the stepfather!) as the other account
> in A/R I end up with a -ve income for him.  That seems to make sense to me:
> e.g. Income:Salary shows $2000 and Income:ReadDad shows: -$720.  That looks
> ok - apart from the fact that Income is then shown as a total of $2720,
> because gnucash sums the absolute values for some reason.  So while I
> understand how I can put new amounts for physical expenses into A/R when I
> pay bills, I don't see where money like the missing child support is
> supposed to come from.  Well I know the person it's supposed to come from,
> just not the gnucash account!

I would do it this way.  When the child support is owed to you, make a
transaction from Income:ChildSupport to a holding asset,
Asset:ChildSupport.  When he actually PAYS the child support you can
make another transfer from A:CS to Checking.

Note that Income should increase here, as should the asset..  If either
Income or the ChildSupport Asset are decreasing then you're entering the
transaction backwards.

> Sorry for being so dim.  Any help you can dispense is most welcome.

First thing I would recommend:  ALWAYS enter transactions from an Asset
or Liability account.  It just makes more sense to humans this way.
This about it as the flow of value/money (even if money hasn't quite
changed hands).  What you're recording is the *promise* or *expectation*
of money changing hands.  That's why you need the extra Asset accounts
to hold that expectation until the money actually DOES change hands.

Hope this helps,

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available