Most loans (certainly mortgages) aren't allowed to grow like this, so the
manual doesn't cover it. When your interest accrues, it will look like this:
Credit cards, lines of credit, etc. do
This is less a gnucash question than a fundamentals question, and once I
show you what you might want in the CoA for this type of loan, how you
enter transactions should become obvious. The point is that here you may
want to track principle and interest separately. Thus :
Line of Credit (under liabilities)
Principle (child of Line of Credit)
Interest (child of Line of Credit)
You are confusing the difference between cash basis accounting and
accrual basis accounting by thinking that physical cash has anything to
do with it << you are thinking about "cash flow" >> Thus if you bought a
car (asset) by borrowing the money, you debit car and credit loan NOW
(even though no physical cash changed hands). In your case, you should
debit "interest expense" and credit the loan when they charge you the
interest. You had an expense that you paid for by assuming liability as
of that date.
I point this out because often "line of credits" come with what look
like checks. You might acquire an asset or pay an expense with one of
those instead of a check against bank account. You record a transaction
like that when it happens, not at some time in the future when you might
make a payment against that liability (THAT is a different sort of
transaction, essentially a "transfer").
Accrual basis accounting is something quite different. I don't think you
should worry about what it actually is at the moment.
Michael D Novack
_______________________________________________
gnucash-user mailing list
gnucash-user@gnucash.org
To update your subscription preferences or to unsubscribe:
https://lists.gnucash.org/mailman/listinfo/gnucash-user
If you are using Nabble or Gmane, please see
https://wiki.gnucash.org/wiki/Mailing_Lists for more information.
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
