Expense vs Liability

[Maf. King]

On Saturday 13 November 2010 16:55:09 Dennis Powless wrote:
> This is so very confusing.  I guess I want to treat the medical bill
> account as if it was a credit card where you will have periodic
> increases and then pay on it monthly or from time to time.
>
> While in the credit card account I use expense accounts just as I
> would in the checking account to raise the balance.  This works fine
> for that.  I'm not sure what to use to 'raise' the balance in the
> medical bills account?  equity accounts?  I'm just confused as to
> where the money comes from to raise the medical bill account.
>

Hi,

A credit card account is a Liability account.  GC just makes an artificial 
distinction of credit card being its own type and so lets you do things like 
pay the card bill after you reconcile etc.

Create a new account (of type liability) called something like 
Liabilities:DrSomebody.  When you get a new bill, enter it in that account 
and transfer to Expenses:MedicalExpenses (maybe you have more than one 
Medical Expenses account - Dr. fees/drugs/tests for example - you can split 
your transaction if needed).  This should be just the same method as if you 
buy groceries using a credit card.

When you pay some (or all) of the bill, you transfer from checking to the 
Liabilities:DrSomebody account.  The expense part has already happened, so 
the payment transaction doesn't affect Expenses. (again, just like when you 
pay off some credit card bill.)

HTH,
Maf.