Unable to create liability account under expense account

[John Griessen]

On 11/24/2017 08:29 AM, Mike or Penny Novack wrote:
> i am purchasing cement on credit(Loan) that is accounts payable i.e. liability Here i need to create liability account for cement 
> under material expenses, but i am unable to create a liability account for cement under material expense account so that i can 
> record total material spend including liability for cement this is very minimum accounting requirement. Regards Suresh

The cement is on credit, but it is not an expense in the business sense because it has not been used up yet.  It is an asset that 
still has trading value and could be sold, possibly for a profit, without using it up in a process of construction.

How to neatly handle it in gnucash is to create invoices for all of the cement, one for each batch purchased, with an asset 
account used for its invoice line item.  That invoice will be paid by the credit account -- the loan.  At the time the invoice is 
paid, a 2 entry transaction happens with cement asset on one side and a cash paid account entry on the other.  Create an account 
for the loan.  The loan will have a cash entry on one side and a liability on the other.

When you build something, or sell bags of cement, a transaction has two sides -- one is asset which gets reduced by bags of 
cement, the other is expense called cost of goods sold, if sold, or if used by you in construction of anything not owned by you.

If it goes into a building you own, then that is an asset also, and you would have an asset transfer from asset account to asset 
account.

-- 
John Griessen
industromatic.com  Austin TX  building lab gear for biologists