[GNC] Accounts which are both Income and Expense accounts

[David Cousens]

Chris,

As someone suggested earlier , you question indicates that you need to better
understand double entry bookkeeping
(https://gnucash-docs-rst.readthedocs.io/en/latest/guide/C/ch_basics.html#accounting-concepts
That explanation is still fairly cursory. A search online for "double entry
accounting" and  "debits and credits" will usuually produce a lot of material to
explain in more detail. Thinking in terms of payments makes it more difficult.

The function of a debit or credit  in an entry depends on the basic account type
and the accounting equation expressed in the in the form
 
Assets+ Expenses=Liabilities + Equity +Income

Accounts of the type on the left hand side will have the balance of the account
increased by a debit entry and decreased by a credit entry with the reverse for
accounts of the type on the right hand side. For example in accounting practice
the balance  of an account is always expressed as a positive number and the
account is said to be either in credit or debit. For an Asset account (LHS) a
debit balance is a positive balance and a credit balance is negative (and
usually put in red ink) The same for expense accounts. These are debit balance
accounts.

A Liability account (and similarly Equity and Income accounts) is a credit
balance account  and a credit to the account increases its balance and a debit
decreases the balance. So if a Liability, Equity or Income account has a credit
balance  in accounting it has a positive balance in arithmetical terms.

Any transaction has at least two entries, a debit to one account (e.g. of type 
Asset and a credit to another acoount (e.g. of type Expense) for the same
amount. It can have more than two entries to any relevant accounts but the sum
of the debits is equal to the sum of the credits for the transaction.

David Cousens

On Mon, 2023-07-24 at 16:53 +0100, Chris Green wrote:
> Is there a 'right' way to handle an account which gets payments in two
> directions?
> 
> E.g. I have good relations with a friend and we often buy things for
> each other and settle up at the end of the month.  Sometimes I owe the
> friend some money, other times the friend owes me some money but it's
> very definitely one account and one wants to see all the payments in
> one place.
> 
> I guess one can just say it's an 'Expense' account and make payments
> in either direction as required, is this the only way or is there a
> special name for such an account?
>