How to account for rent cheque?

[Michael Hendry]

> On 1 Mar 2015, at 23:54, 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.

I see that Edward Doolittle and Michael DeBusk have already made contributions to this discussion, and I agree with their advice.

Your rent, paid on the same day each month, is not essentially different from other regular fixed expenses (such as insurance premiums, monthly bank charges), nor from regular variable expenses like telephone and utility bills.

I use the Scheduled Transaction feature for these predictable expenses, and set the transactions up so that they’re processed in advance. For the variable charges I use an average figure and adjust it when the bill comes in, or when the time comes to reconcile my accounts with the bank statement.

I do the same for regular income. 

Doing it this way, I can inspect the register for my current bank account, check the balance as it stands today, and look into the future below the blue line which marks today’s date. This way, I can visualise these liabilities and assets where I need to see them - in my bank account - and reduce the risk of an unplanned overdraft.

I treat longer-term assets (e.g. a loan to one of my children to support house purchase, paid off monthly over several years) as Current Assets and Liabilities; these are automatically carried forward at the end of the financial year, and appear on the Balance Sheet as such. I don’t really need to have these in-my-face on a day-to-day basis, but I do need to see the regular transactions associated with them.

Enjoy your journey!

Michael

> 
> 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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