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.mich...@gmail.com> wrote:
On 21 Nov 2024, at 19:08, Griffin <grif...@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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