Handling margin accounts (expenses vs income, assets vs liability)

[Justus Pendleton]

I have a marginable cash account with Interactive Brokers. If it has a positive balance, then it is an asset and I earn interest income. So I originally set it up something like this:

open Assets:IB

2000-01-01 * "Opening balance"

  Assets:IB     100.00 USD

  Equity:Opening-Balances

2000-01-01 * "Interest income"

  Assets:IB     2.00 USD

  Income:Interest

But since the account is marginable, it can go below zero. At which point it switches from being an asset to a liability. Instead of having interest income, I have an interest expense.

2000-01-02 * "Withdraw lots of money"

  Assets:IB      -500.00 USD ; this makes the account balance negative

  Assets:BofA

2000-01-02 * "Interest payment"

  Assets:IB      -2.00 USD

  Income:Interest ; or should I start putting Expenses:Interest here instead?

Now, I realise that at some level Assets and Liabilities are the same things just with different signs. And the same is true-ish for Income and Expenses. So I guess I'm looking for advice on best practices or experience from people who've done something like this before.

1. Should I bother setting up a Liability:IB and use that when the balance in Assets:IB goes below $0?

2. Should I bother using Expenses:Interest versus Income:Interest (but with the "wrong" sign)?

Has anyone found any real pros or cons in actual use between these approaches? Are there things that are easier or harder with one approach versus another?

[Metin Akat]

Hi,

In my experience, it doesn't matter at all.

I have lots of this kind of accounts. For example for various people who owe me or I owe them some money (for trips etc.). After several years of having both Assets and Liabilities account for everyone, I just gave in and now I only have Assets:Lent:PersonA which can go negative.

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[Justus Pendleton]

On Friday, September 8, 2017 at 4:05:33 PM UTC+7, Metin Akat wrote:

Hi,

In my experience, it doesn't matter at all.

I have lots of this kind of accounts. For example for various people who owe me or I owe them some money (for trips etc.). After several years of having both Assets and Liabilities account for everyone, I just gave in and now I only have Assets:Lent:PersonA which can go negative.

Maybe this doesn't happen in your case (most people don't charge interest to their friends) but would you also just have a single Interest category and use that for both income & expense?

I'm leaning towards just having a single Asset and a single Income category using negative amounts in them. 

[francois PEGORY]

For me in order to not create an account for each person, i created an account assets:Friends.

Envoyé de mon iPhone

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[Metin Akat]

On Fri, Sep 8, 2017 at 2:53 PM, francois PEGORY <pfranc...@gmail.com> wrote:

For me in order to not create an account for each person, i created an account assets:Friends.

Envoyé de mon iPhone

Le 8 sept. 2017 à 12:32, Justus Pendleton <just...@gmail.com> a écrit :

On Friday, September 8, 2017 at 4:05:33 PM UTC+7, Metin Akat wrote:

Hi,

In my experience, it doesn't matter at all.

I have lots of this kind of accounts. For example for various people who owe me or I owe them some money (for trips etc.). After several years of having both Assets and Liabilities account for everyone, I just gave in and now I only have Assets:Lent:PersonA which can go negative.

Maybe this doesn't happen in your case (most people don't charge interest to their friends) but would you also just have a single Interest category and use that for both income & expense?

I'm leaning towards just having a single Asset and a single Income category using negative amounts in them. 

I have never had any ambiguity with Expenses and Income, so I use them both and they are very natural to me. 

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[Martin Blais]

I think it's possible that you really have two separate accounts, a 

1. cash account, used to cover your margin

2. margin account, used to borrow

The former is an Asset, the latter a Liability.

(1) is used to cover for the risk involved in the positions acquired with (2).

That's how I'd track this

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