Liability Account

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Lazar Slavkovic-Raco

Aug 29, 2023, 3:51:20 PMAug 29
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Hello everyone!

I am new to the plain-text accounting and after some buildup of the transactions I stumbled on the problem of adding new account for Liabilities. When I am creating new transaction where I created new Liability, to which counter account should be tied to? My first initial thoughts of this would be to my assets but I want to hear from you.

Martin Michlmayr

Aug 29, 2023, 9:12:55 PMAug 29
* Lazar Slavkovic-Raco <> [2023-08-29 12:51]:
Initially, it would typically be an expense; assets is only involved
when you eventually pay off the liability.

For example: you buy some stuff (e.g. computer, raw materials, etc)
but can pay 30 days later. You now have:

- And expense. But you didn't pay with cash (an asset) but instead
you owe the amount (a liability)
- Later you pay the debt (liability) with cash or bank transfer (assets)

In ledger:

2022-08-30 * Buy stuff
Expenses:Stuff 1000.00 USD
Liability:Payable -1000.00 USD

2022-09-30 * Pay for stuff
Liability:Payable 1000.00 USD
Assets:Bank -1000.00 USD

Now there's no Liability:Payable anymore, your bank account is lower
and your expenses higher.

(Obviously Expenses:Stuff is a really bad account name; for example
Expenses:Electronics might be good if you buy a computer).

Martin Michlmayr

Lazar Slavkovic-Raco

Aug 30, 2023, 2:32:40 AMAug 30
I see now. Thanks for the answer!


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