Assets with a negative value treated as zero in reports

Buddha Buck blaisepascal at gmail.com
Wed May 15 15:15:04 EDT 2013


On Wed, May 15, 2013 at 2:59 PM, Derek Atkins <warlord at mit.edu> wrote:

> What does it mean to have a "Negative Asset"?  How can you have negative
> cash in your wallet?  How could you have negative money in your checking
> account?  And no, "overdraft" doesn't count, because that's yet another
> account that would be a Liability that gets tied to your checking
> account.
>

I don't understand the bit about an overdraft being a liability account
tied to a checking account.  Certainly my bank displays my account balance
as negative when I'm in an overdraft situation.

How would I set it up in GnuCash so that an overdrafted account is handled
correctly as a liability?

Without getting into the dynamics of having overdrafted bank accounts
(generally considered a bad thing), how would/should I deal with this
situation:  I bill a customer $50/month for a recurring service on the
first of the month, starting 1 January; He sends me a payment for $300 on
January 15th, explicitly telling me it's a prepayment.  Naively using the
business functions in GnuCash, this would have the following balances in
the Asssets:A/R account: 1/1: $50, 1/15: $-250, 2/1: $-200, 3/1: -$150,
etc.  If the A/R asset account is never allowed to be negative, how should
GnuCash be set up to handle this properly ("properly" meaning that the
Customer Report for that customer reports the correct outstanding balances,
and that the invoices are listed as "paid" when searching for invoices for
the customer)?


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