[GNC] liability or expense

[Stephen M. Butler]

On 08/06/2018 01:59 PM, Baldero Mendoza 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!
> _______________________________________________

All  of us were brand new at one point.  I'm not much past that stage
either.

I'm not a CPA nor a book-keeper (though am married to an accountant and
have written accounting software), so this is just my opinion.

1.  I would make an expense category for "Software" rather than tying it
to "Google Play" -- but that's just my approach.  Would make it an
expense though.

2.  The Google Play items (at least some of mine) get charged off to
your credit card.  That would be a Liability account (short-term).

3.  So, the two sides for the transaction (purchase) would be the
expense (Software or Google Play) and CreditCardClearingAccount (Liability).

4.  When you pay off the credit card, the transaction would be the
CreditCardClearingAccount (to reduce toward zero) and the Checking
Account (Asset) from which the payment was made.

Hope this helps clarify your thinking.

--Steve

-- 
Stephen M Butler, PMP, PSM
Stephen.M.Butler51 at gmail.com
kg7je at arrl.net
253-350-0166
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