Keeping track of small debt between friends, both ways

[Mike or Penny Novack]

"It doesn't feel right to put this under Assets or Liabilities because 
it can represent either, depending on the sign of the balance. Cheers"

So can those.

Look, this is really a problem (in perception) because in order to save 
time most of us are jumping right in without taking the time to 
understand the fundamentals of double entry bookkeeping, especially not 
in terms of old fashioned debits and credits.

a) Asset, Liability, and Equity are the three FUNDAMENTAL types of 
accounts (Income and Expense accounts are really "temporary" accounts of 
fundamental type Equity, to which they would be closed by the 
traditional "close the books" operation)

b) Accounts of type Asset NORMALLY have a debit balance.

c) Accounts of type Liability and Equity NORMALLY have a credit balance.

Take your checking account for example. It's an account of type Asset 
(under Current Assets). It would NORMALLY have a debit balance. But 
suppose you got into an "overdraft" situation. The account would then 
have a credit balance, you OWE the bank money, this asset is acting as a 
liability (a negative asset). Doesn't mean you need to move the account!

For your problem, decide what the NORMAL situation would be. Do you 
expect this friend would be owing you more often than not, or would you 
be owing the friend more often than not. THAT is how you choose between 
Asset and Liability. If you can't predict or it really flips back and 
forth all the time, flip a coin.

Michael