How to set up a shared account in GnuCash?

[Lincoln A Baxter]

On Sun, 2010-10-24 at 14:02 +0200, Peter Boosten wrote:
> On 24 okt 2010, at 12:39, Jari Pääkkö wrote:
> 
> > However, now I should still somehow record my girlfriend's half of
> the expenses. How should I do this? One solution would be to create a
> new account representing my girlfriends expenses and put her half of
> the expenses there. Again, I'm not quite sure, if this is the right
> way to do this.
> 
> 
> Either the account is part of your assets, or it's not.
> 
> If you just want to record your part of the shared account, then you
> should not record your girlfriends'. But then your records will not be
> the same as the banks'.
> 
> You could record your girlfriends' deposits as income, but you will
> also have to record her withdrawals as costs (probably create a
> separate account for that), or otherwise your assets are incorrect.
> 
> The question is: what's the use of a shared account, when all has to
> be registered separately?
> 

Since you only own 1/2 the shared account and someone else owns the
other half you really have to setup a separate set of books (in
GnuCash) ... separate data file, for the Shared Account.  Someone this
list pointed this to me about 2+ years ago with my partner and I bought
a house together.

In your personal Gnucash file, record your "expense" as transfers to the
Shared account (as an expense account) Expense:"Shared Expense Account."

Your Girl friend can do that same, if she is so inclined. In the Shared
books, you do have to agree on expense accounts, but that way you will
be able to reconcile the account.  Usually, it is best if one person
does the accounting for a given account.  Sounds like you care more, so
that should probably be you.

I share expenses with my Partner, but I do it little differently.  We do
not share any accounts, and she still uses paper to balance her
accounts. 

I pay for (and account for) all shared expenses from my checking account
or credit card, to expense accounts I have defined in my GC "books."  At
the end of each month I transfer the shared portion of the expenses
(from those expense categories (accounts) we have agreed to share (like
utilities or food) to an Asset account: "Owed to Me:My Partner."  I am
effective lending my partner 1/2 of our shared expenses every month as
they are expensed.  (Remember, from a lenders point of view a loan is an
asset)  After I give my partner a report of the shared expense (in the
owed to me account) she writes me a check for the total of the "Owed to
Me" account, which I deposit into my checking account.  This deposit is
accounted for in GC as a transfer from the Asset "Owed to me:My Partner"
account to my checking account. This closes the loop, and returns to my
checking account the amount I "loaned".  BTW, this is how one would
handle any "loan" made to another person.  I have owed to me accounts
for my son and others with whom I have agreed to split expenses.

In the case where my partner pays for something we want to share, I just
give her a credit on the owed to me account, with a transfer to my
expense account (category) for the item(s) she payed for.

It really helps in sorting these kinds of things out to remember basic
accounting equations.  Assets and Income are balanced by Liabilities and
Expenses.
        
        
        Assets + Income = Liabilities + Expenses
        
        Hence:
                NetIncome = Income - Expenses
        and
                NetWorth = (Assets + Income) - (Liabilities + Expenses)
        

When you lend, the amount lent is still a Asset, when you borrow (like
on a Credit Card), the amount borrowed is a liability, you have the
liability, until you pay it of.  So if you think about the transaction
flow for the basic credit card transaction:  Expenses are paid for with
transfers from the Liability account (the credit card) thus increasing
the loan, and the credit card (liability) balance is reduced with a
transfer from an Asset account (the checking account) to the liability
account (credit card).   

The personal loan example above works exactly the same way, only on the
Asset side instead of the Liability side.

If one thinks about what categories a transaction crosses, you'll find a
way to account for it in GnuCash.  I love GC.  

Thank you Derrick et al.

Lincoln