How should I record outstanding expenses in GnuCash?

[absconditus absconditus]

Thanks a bunch Kevin. This seems to work. Would this be an accurate
representation of the above transactions?

If Assets - Liabilities = Equity + Income - Expenses

    10 - 5 = 5 + 0 - 0

then

A) On the day the bill is due:

  10 - (5+3) = 5 + 0 - (0+3)

  10 - 8 = 5 + 0 - 3

B) On the day the bill is paid

  (10-3) - (8-3) = 5 + 0 - (0+3)

If the above is true, would not transaction B contradict the following rule:

"The two Income and Expense Accounts are used to increase or decrease
the value of your accounts. Thus, while the balance sheet accounts
simply track the value of the things you own or owe, income and
expense accounts allow you to change the value of these accounts."
http://www.gnucash.org/docs/v2.4/C/gnucash-guide/accts-concepts1.html#accts-bsa2

This on the grounds that we are changing both Balance Sheet Accounts
without using Income and Expense accounts.

I am trying to understand what is taking place, as opposed to simply
being able to repeat it.

PS I apologise if anyone receives the email twice. New to mailing lists.

On Sun, Sep 7, 2014 at 5:56 PM, Kevin Reid <kpreid at switchb.org> wrote:
> On Sep 7, 2014, at 7:22, absconditus absconditus <absconditus87 at gmail.com> wrote:
>
>> By 'outstanding expenses,' I mean bills that are due but that you
>> cannot, at present, pay. Nor do you know exactly when in the future
>> you would be able to pay.
>>
>> Here's what I've experimented with:
>>
>> I have created a new liability account ('TEST') with an opening
>> balance equal to the amount of the bill. I dated this initial
>> transaction to when I was supposed to pay the bill.
>>
>> So far so good. Recording the bill's payment is what I find difficult.
>> To record the transaction, I have credited the 'Cash in Wallet'
>> account, and debited the 'TEST' account.
>>
>> The problem is this bypasses the 'Expense' account. Ideally, I would
>> like for the bill-payment transaction to show as an expense.
>
> You should record what you're calling the "opening balance" of the liability account as being from the expense account (as opposed to Equity:Opening Balances). This will make everything work out.
>
> By choosing to enter the bill as a liability, you're, shall we say, acknowledging it exists for accounting purposes, and expenses go into Expenses at the date you acknowledge they exist, not the date you pay them. (Compare this to credit card transactions, which are essentially the same thing: you enter them as expenses on the date you got the liability -- you used the card -- not the date you pay your credit card bill.)
>
> When the bill is due, you enter this transaction:
> Expenses:That Bill     +$X
> Liabilities:That Bill  -$X
>
> When the bill is paid, you enter this transaction:
> Liabilities:That Bill  +$X
> Assets:Cash in Wallet  -$X
>
>
> Disclaimers: I am not an accountant. Terminology may be wrong. Advice may be bad.
>
>
> --
> Kevin Reid                                  <http://switchb.org/kpreid/>
>