What has happened in the transaction? You have taken money from an asset (bank account) and exchanged that for another asset (a car) which you have control of and use as a resource, so there is not an expense involved.
Hence the transaction will be a debit to your bank account (decreasing that asset) and a credit to an asset account for the car (increasing the value of the asset that is the car from zero). An expense is something which depletes an asset and is expended or used. The general criteria for something to be an expense is that you are going to use or consume it (or expect to) within a pewriod corresponding to the current accounting period (usually annual). For example, if you buy a ream of paper for your printer, you would generally expect to consume that within the next year or so, so you would generally record that as an expense and not as an asset. If you were to record it as an asset, then, as you printed each sheet of paper out, you would then have to record the value of each sheet as a separate expense, so that you are recording the depletion of the asset and that is clearly not tenable and a huge waste of effort. In a manufacturing business however you may purchase several years worth of materials which you expect to consume over a number of years because you can get a break on the quantity and at a good price at the current time and you have a reasonable expectation that prices are likely to increase. This is a case where you would record the purchase as an asset, and then expense the consumption of the asset in the year in which that consumption occurred as you manufactured items for sale. The value of that asset you exchanged money is depleted by depreciation, loss or write off in the event of an accident, losses when sold etc. Such changes can be recorded as expenses. Whether they are deductible expenses for business or taxation purposes and when those deductions are allowed depends on the business and tax rules and regulations you are subject to. David Cousens ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html _______________________________________________ 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.
