Opening a new account

mshires mshires.wcc at gmail.com
Wed Dec 31 19:07:02 EST 2014


Personally, I think your first entry was fine for general purposes for
personal use.

It seems there are several ways to view this, depending on how complex you
want to make it.

If a couple of people own a business, and one of them decides to add some
additional capital, say $10,000 of their own cash, the business would debit
cash and credit Owners Equity.  Which is what you wondered if you should
have done.  I guess that depends on you.  Not giving accounting advice, but
was it equity or "other income", as in your original entry?

Again, not giving accounting advice, but if you feel this isn't really an
equity transaction, then the gift card is like found money or other
income....not related to your normal "business" activity.  As others said,
you can create an asset account 'Kroeger Gift Card' and debit that (which
you did).  Then, if you want to keep track of items like this you could
create and credit an "other income" account.   Your first idea is fine to
my way of thinking.  You credited your 'income' account.  If you want more
detail in your "income" accounts, simply hierarchical your various income
sources and add one for "other income".  In business, other income can
include found money on the floor, interest income from a checking account,
monies received from a class action lawsuit, etc.

Why one versus the other?  Depends on a LOT of factors that an accountant
would be best for advice .... laws vary from various taxing authorities
state by state, or country by country.  Are you using GNUCASH to prepare
your tax returns?  If so, I would seek the advice of an accountant....some
income may be taxable, and other not, which would require different
accounts for reporting.  :)

Personally, I think your first entry is how I would have done it, too.

Mill Shires
















On Wed, Dec 31, 2014 at 10:11 AM, Tommy Trussell <tommy.trussell at gmail.com>
wrote:

> On Wed, Dec 31, 2014 at 10:10 AM, Ken G. <beachkidken at gmail.com> wrote:
>
> > Greetings:
> >
> > I was given a grocery store gift card in the amount of twenty dollars. In
> > keeping track of it, I did the following:
> >
> > Debit Asset Account:
> >
> >     Kroger Gift Card $20.00
> >
> > Credit Income Account:
> >
> > Kroger Gift Card            $20.00
> >
> >
> > Later on, I kept wondering if I should have use the following:
> >
> > Debit Asset Account:
> >
> > Kroger Gift Card
> >     Opening Balance    $20.00
> >
> > Credit Equity Account:
> >
> > Kroger Gift Card
> >     Opening Balance            $20.00
> >
> >
> I am not an accountant, (but I do my own bookkeeping using GnuCash for
> myself and others).
>
> Here's how I would suggest thinking of it:
>
> The gift card is what folks call a "stored value card." You can buy generic
> credit cards that work exactly the same way (but watch out for the fees).
>
> Here's how I would suggest doing it, especially if you expect to keep using
> it (many can be replenished for free at the store, and the store may offer
> incentives for you to use it).
>
> Create an Asset account for this (and if you keep track of several, make it
> as hierarchical as you need.
>
> Assets:Current Assets:Kroger Card
> or
> Assets:Current Assets:Store Cards:Kroger
>
> To register your receipt of it, either you bought it (using a transaction
> from another asset account) OR it was a gift. If it was a gift, make a
> transaction to the card using the two accounts. From the perspective of the
> card:
>
> Income:Gifts $20 (out)
> Assets:Current Assets:Kroger Card $20 (in)
>
> I haven't tried to make columns here because they might not show up in
> email. If you open the Income account the columns will be switched.
>
> When you spend from the card, enter the transactions in the Kroger Card
> account using your existing expense categories:
>
> Expenses:Food
> or
> Expenses:Entertainment
> (or whatever)
>
> You can have as many splits as you need/want to account for each item (or
> category of items) you bought in each transaction.
>
> If you somehow manage to spend through the vast $20 stored on the card and
> need to use a credit card or cash to pay for the rest of your items, you
> can enter a split transaction that includes more than one payment category,
> too.
>
>
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