Under what accounting head should this account be created?

[Michael Hendry]

> On 14 Jul 2015, at 13:25, Colin Law <clanlaw at gmail.com> wrote:
> 
> On 14 July 2015 at 12:14, nosherwan <nosherwanh at gmail.com> wrote:
>> Thanks mike, thats what I was thinking about.
>> 
>> so if I create accounts like so, should I only create one account? or
>> should I create two accounts for the same person?
> 
> Definitely only one account.  Then the balance shown on the account
> will be the amount you owe him or the amount he owes you depending on
> the current situation.  A positive value in one case and negative in
> the other.  I normally put such accounts under Assets, in principle it
> is no different to a bank account that provides overdraft facilities.
> 
> Colin

Agreed.

I use this method to deal with occasional loans I make to my children to cushion large bills - e.g. my US-based son’s huge dental bill!

I use Assets=>Current Assets=>Tooth Fairy to keep track of this account, which is gradually paid off in GB pounds from his UK current account.

In theory, he might “overpay” his debt, leaving a negative value in the account, which would mean I could deal with expenditure in GB pounds on his behalf.

If you were to have several friends to deal with you could set up:

Assets=>Current Assets=>Friends=>Tom
Assets=>Current Assets=>Friends=>Dick
Assets=>Current Assets=>Friends=>Harry

and see your overall position as the balance in Assets=>Current Assets=>Friends

Michael