Keeping track of small debt between friends, both ways

[Edward Doolittle]

On 4 August 2015 at 12:58, Pedro Emílio Machado de Brito <
pedroembrito at gmail.com> wrote:
>
>
> On Tue, Aug 4, 2015 at 12:41 PM, Mike or Penny Novack
> <mpnovack at mtdata.com> wrote:



> > 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!
>


> I *think* I understand the basics of accounting and double entry
> bookkeeping. I read most of the documentation a few months ago, when I
> started using Gnucash. It's just that a negative asset or negative
> liability seems odd, that's all, it's nothing technical, I was trying
> to find another way to deal with it that seemed more natural.



> > 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.
>


> I just wish there was a category for "flips back and forth all the
> time". Oh well, it's under Assets now.


If you really want all your numbers to be positive, you can set up accounts
under both Assets:FriendOwesMe and Liabilities:IOweFriend . When you borrow
money from your friend, it will increase the liability account, and when
your friend borrows money from you, it will increase the asset account. If
both are positive and you want some asset to offset the liability (or vv.)
you can create a transaction transferring from the asset to the liability.

The only problem with that scheme is that you have to check in two
locations (and perhaps do some arithmetic) to see who really owes what to
whom.

-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI