Budgeting and negative balance

[Edward Doolittle]

When you took the car loan, there should have been a single transaction
with two legs (ignoring fees and one-time expenses that may have been
rolled into the car loan):

Dr. Assets:Fixed Assets:Car $10,000
Cr. Liabilities:Loans:Car Loan $10,000 <-- that's +$10,000

I guess you could consider the car a "current asset" because you could sell
it in less than a year.

With that transaction, your balance sheet (not your budget balance sheet)
should be correct, which is the highest priority. So make sure that is
correct and then take another look at the budget.

As for the budget, my guess is you didn't include the Assets:Fixed
Assets:Car account in the budget. If you include the loan in the budget,
you should probably include the car asset as well. Alternatively, you can
include neither the loan principal nor the car asset; the important thing
is including in your budget the transfers corresponding to the car loan
payments.



On 10 March 2015 at 08:39, Nicolas Belgium <nicolas at fairon.net> wrote:

> Hello,
>
> I wanted to do double-entry accounting for my home accountability,
> especially to do fine grained budgeting. Everything looks fine with gnucash
> except when I'm about to do budget.
>
> Here is a simplified situation:
> On a given month I plan to buy a car. For that month I put *-10000* in a
> *"car loan" liability account* and I added *10000* in *Current Assets -
> car*.
> By setting -10000 I have a* correct Budget balance sheet* as my liabilties
> and assets increased but on the budget sheet I ended-up with 20000 in
> Transfers and a negative Totals (Income - Expenses - Transfers).
> If I set *10.000 as car loan*, Totals are correct, but Budget balance sheet
> shows a negative liability.
>
> What am I missing here?
>
> Little precision, I'm not accountant, I discovered double-entry accounting
> during accounts presentation as a member of the board of a non-profit
> organization and I enjoyed all the possibilities it offers in term of
> budgeting so I want to implement it at home.
>
> Thank you all for your help, I don't mind if I get RTFM answers, but please
> be kind and point me the page if so because I'm quite stuck for 2 days
> looking all forums threads about budgeting and gnucash.
>
>
>
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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