Creating a dummy account in assets to track housing loan..is it the right way?

[DaveC49]

Hi Vinod,

The normal way of recording a loan is with a Liability account as you have
an obligation to pay the money back to the bank, i.e. when the loan for xxxx
is issued

Asset:Bank                 Db  xxxx
Liability:Home Loan                         Cr xxxx


payments yyy on the loan would be recorded as

Liability:HomeLoan      Db yyy
Asset:Bank                                      Cr yyy 

You will also have to record the interest charges www by your lender

Expense:Loan Interest  Db www
Liability:HomeLoan                          Cr www

The balance of the Liability:HomeLoan account tells you how much is owing to
the bank. 

To track your spending for construction you would use an Expense account
i.e. to pay zzz for something

Expense:Construction    Db zzz
Asset:Bank                                         Cr zzz

The balance of the Expense:Construction account  gives you the costs. If you
need a more detailed breakdown on what was spent on various aspects of
construction, use sub accounts of the Expense:Construction e.g Carpentry,
Plumbing Electrical etc and record the appropriate costs against the
appropriate sub account.  Each of the above is a single transaction which
affects two (or more) accounts in each case. The two components of each
transaction are referred to as splits in Gnucash. If this is still not clear
look up Double Entry bookkeeping in Wikipedia.

Hope that helps

David Cousens



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