How to account for rent cheque?

Edward Doolittle edward.doolittle at gmail.com
Sun Mar 1 20:38:27 EST 2015


The way I understand it is: when you write a cheque, it is an expense,
because you have made a commitment to pay. Liabilities represent claims on
your assets or obligations to pay, for which you have not yet committed to
paying.

Your bank account balance as reported by the bank, and as reported by
GnuCash, will often be out of sync. One of the nice things about using
accounting software like GnuCash properly is that your personal records
will be more up-to-date than the bank's; for one thing, cheques you have
written but which have not yet been cashed will be present in your personal
records.

Periodically you will need to "reconcile" your records with the bank's.
When you receive a bank statement, you should go through the reconciliation
process that GnuCash makes available (big Reconcile button). Typically you
will find that the bank has a few transactions that you may not have
recorded, for example interest, maybe service charges, and maybe
transactions you forgot to record. You should check whether each of those
transactions is legitimate, and if so, enter them into your records. (If
they are not legitimate, you need to contact the bank promptly to resolve
the issue.)

You will also likely find that the order of transactions in your records
does not match the order in the bank statement. I handle that phenomenon by
walking through the bank statement one line at a time, checking the
corresponding box in the reconciliation window wherever it may be.
Alternatively you can walk through the reconciliation window in order and
check off the corresponding line on the bank statement, but using that
method will require a writing implement whereas the former method only
requires a mouse.

Note that reconciliation only ensures that your records are in sync with
the bank's up to a certain date. After that, depending on how careful you
are, your records could be more accurate. If you have a lot of transactions
or get surprised regularly you might want to check in between
reconciliation periods using the bank's online services.





On 1 March 2015 at 17:54, geo909 <geo909.fora at gmail.com> wrote:

> Dear all,
>
> First off, I do realize that this is more of an accounting question, but I
> took the liberty to post here. I'm very new to gnucash, accounting and
> double entry bookkeeping and I find myself lost very often; I would really
> appreciate any help.
>
> The manual says that the rent that I pay should be accounted as an expense.
> However, the way that I do it is that I give to my landlord a cheque with
> the rent amount, each first day of the month. This seems to me like being a
> liability, which disappears when my landlord cashes the cheque.
>
> So, how should I account for it? If I create a Liabilities:Rent Payable
> account, and increase it by the rent amount every first of the month, from
> where should I transfer the money? If it is my bank account, then my bank
> account shows a wrong balance, since it accounts for the cheque that is not
> yet cashed..
>
> Thanks a lot in advance.
>
>
>
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-- 
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


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