Subaccounts [WAS Re: Future allocated money vs Budgets]

[Matt Graham]

Ah, sorry Mike. Very different concept based on the way I think:
Using liability means:

Dr increase cash
Cr increase liability
Perfect for what you are talking about.

But what I want - segmenting funds -decreases available cash for other purposes, so I would want to Cr cash to reflect it not being available, but then I would have a negative liability, which makes no sense (if someone owes me, I would call it an asset anyway)

So it is probably neater (or at worst no different) just using an asset account to balance the segmenting of the cash (asset).

As you mentioned a few emails ago, doing this effectively adds another layer of tracking thst may or may not be worth the effort. Transactions triggered as you discussed may greatly improve automation - basically getting closer to a "batch change" functionality. Ive got an 80% solution, so Ill write that up see how it goes.

Thanks again everyone,
Matt


-------- Original message --------
From: Adrien Monteleone <adrien.monteleone at gmail.com>
Date: 29/1/18 15:22 (GMT+10:00)
To: gnucash-user at gnucash.org
Subject: Re: Subaccounts [WAS Re: Future allocated money vs Budgets]

Matt,

What Mike was talking about with Liabilities was with respect to ‘reserve’ or ‘restricted’ funds. In the case of non-profits taking donations that can be earmarked
those funds have to be legally separated and cannot be used for any desired purpose.

As well, ‘deposits’ which are pre-payments set aside for particular purpose can’t be thrown into a general funds pool. (you might have to refund them if you don’t deliver the requested goods or services)

But both of those cases are real life liabilities.

The funds don’t ‘belong’ to whomever received them unless and until they are used for the appropriate purpose.

While what we are discussing is somewhat similar in concept, in real life, there is no actual liability incurred by not wanting to spend all you have and not save for vacation or the occasional night on the town, so using that type of account, while mathematically possible, isn’t necessarily the best idea to model what’s going on in the real world.

Regards,
Adrien

> On Jan 28, 2018, at 7:11 PM, Matt Graham <matt_graham2001 at hotmail.com> wrote:
>
> :-) you missed one of the previous posts. Using Liability accounts that way is adding anoter "layer" of accounting to your system. When you look at what liabilities really are, Adrien and I concluded on this thread that this situation (segmenting money for future) is really using a separate asset account. After all - creating a liability INCREASES your cash available. However, shifting it to another asset account (either sub-account or completely different area) reduces cash available AND allows you to record the increasing amount you have segmented. If I get a chance, I think I'll type all this up with some examples (it is easier to show with exampes).
>
> Thanks and regards,
> Matt
> -------- Original message --------
> From: Mike or Penny Novack <stepbystepfarm at dialup4less.com>
> Date: 29/1/18 00:51 (GMT+10:00)
> To: gnucash-user at gnucash.org
> Subject: Re: Subaccounts [WAS Re: Future allocated money vs Budgets]
>
> On 1/27/2018 10:25 PM, Matt Graham wrote:
>> Nice! It seems like we are getting somewhere. I am convinced that the process we think of budgeting where we are saving up for something is really a case of segmenting money within a sub-account. And it looks like Gnucash is already happy with this kind of situation - with the include sub-accounts in the recociliation window.
> Not exactly. This is a case where the term "budgeting" is being used in
> different ways meaning different things. Budgets my be legal
> (organizations, government entities) or advisory (personal, business)
> though of course businesses might have requirements to set aside funds
> << might be in the terms of a loan, etc. >>
>
> ONE way of doing this is with liability accounts (typical -- account for
> amounts needed for taxes) but that method can also be used for "reserve
> funds" <<  I deal mainly with non-profits where "restricted funds" are
> common >>
>
> Note that partitioning of a checking account in this way earlier
> described is still just "advisory" as it would NOT prevent you from
> writing a check for more than the balance remaining in the unrestricted
> portion of the account. Just you can't do that without seeing that you
> are doing it.
>
> Michael D Novack
>
>
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Regards,
Adrien

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