Imbalances

[Michael Hendry]

On 12 Feb 2013, at 09:17, Colin Law <clanlaw at googlemail.com> wrote:

> On 12 February 2013 08:08, Michael Hendry <hendry.michael at gmail.com> wrote:
>> 
>> On 11 Feb 2013, at 23:31, Paul Schwartz <pmjs1115 at gmail.com> wrote:
>> 
>>> My practice is to adjust an equity account to get "pocket cash" to balance.
>>> Another alternative is to charge it to a Miscellaneous expense account.
>>> 
>>> HTH
>>> 
>>> Paul
>>> 
>>> 
>> 
>> Another conventional way of dealing with this is to set up an Expense Account called "Suspense", and use this for your orphaned transactions (they always seem to be Expenses, don't they? Money doesn't often appear in your accounts without your knowing where it came from!).
>> 
>> Assigning it to "Miscellaneous Expenses" makes it sound as though you know perfectly well where the money went, but have difficulty in classifying its destination.
> 
> I do know where it went, it went on miscellaneous expenses with
> amounts that are too small to worry about classifying further and that
> I can't actually remember spending.  Newspapers, a cup of coffee,
> parking and so on.  Miscellaneous.
> 
> Why "Suspense"?  Not that it matters what you call it, as long as you
> know what it means.
> 
> Colin

This goes back to paper book-keeping, in situations where a Trial Balance didn't (balance, I mean!).

The example given in Book-Keeping Made Simple is of an invoice issued but which was accidentally destroyed in a fire at the customer's premises. A copy invoice was requested, but was actually issued as a new invoice, and debited to the company's account but not passed through the Day Book.

In order to get the accounts to balance, a dummy transaction was performed using the Suspense account as a "difference on books". Once the detective work had been done, and the mistake discovered, a transaction between the Suspense account and the fire-damaged company's accounts was made to reduce the balance in the Suspense account to zero.

I suppose the "Imbalance" feature in GnuCash could be regarded as the computer-equivalent of the Suspense account, and indicates that something doesn't quite add up. Once you've established that the money was spent on "Miscellaneous" items, you can zero out the Imbalance. If you're still not sure where it went, you can always leave it in as an imbalance until you have time to work it out. 

Michael