[GNC] liability or expense

[Adrien Monteleone]

I forgot to mention if you go the Business feature route, you don’t need the Accrued Expenses account unless you want to track your limit available. If you just get a bill and pay it, you can just post directly to Accounts Payable.

If it’s a pre-paid asset though, you need that specific account to ‘hold’ the funds until you actually spend them. They aren’t expenses until that happens.

Regards,
Adrien

> On Aug 6, 2018, at 4:16 PM, Adrien Monteleone <adrien.monteleone at lusfiber.net> wrote:
> 
> I’m not familiar with Google Play accounts specifically.
> 
> If they work like a credit limit and you pay later, then they are deferred expenses - thus Accounts Payable.
> 
> If you pre-pay say with a gift card, or you top off the available to spend, then it’s a pre-paid expense - an asset account.
> 
> ====
> So, if the deferred expenses route is correct, you can create a liability account called Accrued Expenses.
> 
> Then under that, create accounts for specific entities if you like (such as Google Play) or just keep them all lumped together - your choice.
> 
> When you make a purchase on the account, record the amount like so:
> 
> Dr. Expenses (whatever account you’d normally use here, say ‘Entertainment’)
> Cr. Accrued Expenses
> 
> When the bill/statement arrives and you pay it, you’d enter:
> 
> Dr. Accrued Expenses
> Cr. Cash/Checking (or even a Credit Card if that’s the case)
> 
> If you want to use the business features because you don’t pay the bill right away and want a due reminder, you can enter a bill from Google Play (set up as a Vendor) and instead of an expense account, book it to the Accrued Expenses account. (or sub-account)
> 
> If it works more like a credit card with a limit and possible interest fees, then you might instead create it as a Credit Card type liability account and use it in similar fashion.
> 
> ====
> Of the pre-paid expense asset account is the right way, create a Current Asset account called Pre-Paid expenses.
> 
> How detailed you get here is again up to you. I have several sub-accounts here for various gift-cards that lets me see at a glance their remaining balance. If I ever receive a card from the same business, I’ll just add it in. But you can lump them all together if you like.
> 
> When buying/receiving a card, or topping up the account reserve:
> 
> Dr. Pre-paid Expenses:Google Play
> Cr. Cash/Checking/Credit Card/Income:Gifts Received, etc.
> 
> When making a purchase, reduce the remaining pre-paid expense with:
> 
> Dr. Expenses (again, ‘Entertainment’ or whatever you find appropriate)
> Cr. Pre-paid Expenses:Google Play
> 
> ====
> 
> Now, as for the red numbers/signs:
> 
> With the Chart of Accounts visible, open the GnuCash > Preferences. (might be Edit or Tools > Preferences/Options in your OS)
> 
> Go to the Accounts tab and play with the settings for Reverse Balanced Accounts. (move the preferences over so you can see the Chart of Accounts)
> 
> The CoA should update to reflect your preference instantly.
> 
> Normally, credit accounts - Liability, Income, Equity are ’negative signed’. If you want to see them all as positive signs (that is a higher number means you owe more, received more and are worth more) then choose ‘Credit Accounts’ for this preference. (this is how I have mine set)
> 
> You might still see some accounts as negatives, but that means they are ‘contra-balanced’ that is, not the normal debit/credit balance for that account type. This may be normal based on the account (if it’s a true contra account) but might indicate an improperly entered transaction, or even something like an overdraft condition. (for a checking account for example)
> 
> Hope that helps,
> 
> Regards,
> Adrien
> 
> 
>> On Aug 6, 2018, at 3:59 PM, Baldero Mendoza <bzy711 at gmail.com> wrote:
>> 
>> Please be patient with me - brand new to this.
>> 
>> Household financial stuff. I want to post a "google play" purchase.
>> Should I post as an expense or a liability?
>> 
>> I have accounts open for things like "electricity" and that seems to
>> work just fine, but "google play" looks like it works sort of like a
>> credit card, so I listed it under  "liabilities", and that seems to
>> work too. I made the connected account "checking" and it all seems to
>> balance and work.
>> 
>> However, what bothers me is that the "google play" entry under
>> "liabilities" is listed as a red negative number. So I have two red
>> negative numbers listed now, one under "liabilities" and one under
>> "google play". Everything balances, so is it okay or should I place
>> "google play" purchases as "expenses"? (I just started gnucash so
>> there aren't any credit card or debit card purchases yet.) The
>> "expenses" stuff gets listed as black positive numbers even though
>> they're an outflow of money just like the "google play" stuff under
>> "liabilities". Maybe it's optional and can be done either way?
>> Confusing.
>> 
>> Thank you everybody!
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