[GNC] Liabilities vs Expenses.

[John Walker]

In standard bookkeeping, a liability is anything that a business owes 
for more than the accounting period which is usually 12 months.  A 
mortgage is a good example.  An expense is something that is paid out 
within the accounting period.  The electricity bill is a good example.

Cheers
John

On 22/11/2024 11:09 pm, Ed Greenberg wrote:
> I do my credit cards the same way, but I don't do individual bills that
> way. For instance the water bill, gas bill, medical copayments, and any one
> time spending, I just record it as a transaction between the bank and the
> expense. The liability accounts are very good for aggregating what's going
> to be part of a payment, but they don't do much for you when there's only
> one charge against a payment.
>
> Ed
>
> On Fri, Nov 22, 2024, 07:05 Michael Hendry <hendry.michael at gmail.com> wrote:
>
>>
>>> On 21 Nov 2024, at 19:08, Griffin <griffin at bernevyl.com> wrote:
>>>
>>> I'm no accountant, so I'm wondering what the difference is between
>> liabilities and expenses, and the importance of that difference.
>>
>> Nor I, so my comments are not definitive.
>>
>>> I currently have GnuCash set up so that everything I spend is an
>> expense. Would it be "better" to have the recurring bills as liabilities,
>> i.e. rent, utilities, etc. If that is the case, would I place a debt onto
>> the liability at the statement date, and then payment when I make a payment.
>>
>> Liabilities accounts are used to record money you’re going to have to pay
>> at some time in the future, and I use them from credit and debit cards in
>> my personal Gnucash accounts.
>>
>> Credit card spending is recorded as a transaction between
>> Liabilities:Mastercard and Expenses:Groceries (or whatever) and the
>> Liability disappears when you pay off the credit card (recorded as a
>> transaction between your bank (e.g. Assets:Current Assets:Bank) and
>> Liabilities;Mastercard).
>>
>> Michael
>>
>>> Does it really make any difference to anything?
>> It means you can reconcile expenditure on your credit card with the credit
>> card statement.
>>
>>> Thanks
>>>
>>> Griffin
>>>
>>>
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