Bank transfer received

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Jay Tindlebaum

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Dec 22, 2022, 1:52:59 PM12/22/22
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Hi,

What's the correct way to handle a bank transfer received for the purpose of paying a shared expense?

I've just entered it as two bank accounts assets, i.e.

dr assets:checking:[my bank]
cr assets:checking:[other person bank]

but then, the system is assuming both as my assets (which is not).

I presume I could consider the bank transfer as an income, but it not an income.

Thank you for your feedback.

Ismael Bouya

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Dec 22, 2022, 2:30:30 PM12/22/22
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Hi,
Here is what I do:
When I buy the item, part of it is not for me, so I have a transaction
that looks like

reimbursments:john doe 30EUR
expenses:something 30EUR
assets:checking:mybank -60EUR

This acts the fact that john doe owes me 30EUR (which I can see in the
reimbursments bucket)

Then later when he reimburses me:
assets:checking:mybank 30EUR
reimbursments:john doe -30EUR

And I can see that the reimbursments account is now at 0, so I’m even
with john doe again :)

Note that the reimbursment can be used in the inverse situation where
he’s paying for something else for me:
expense:restaurant 20EUR
reimbursments:john doe -20EUR

And then a similar transaction to the second one above when I
reimburse him


(Thu, Dec 22, 2022 at 10:52:59AM -0800) Jay Tindlebaum :
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Ismael
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Yuri Khan

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Dec 22, 2022, 2:38:04 PM12/22/22
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On Fri, 23 Dec 2022 at 01:53, Jay Tindlebaum <jose.l....@gmail.com> wrote:

> What's the correct way to handle a bank transfer received for the purpose of paying a shared expense?

If you paid for the shared expense earlier, your friend owes you
money. It’s an asset.

2022-12-01 Shared expense
Expenses 20 USD ;; your share
Assets:Receivable:Friend 20 USD ;; friend’s share
Assets:Bank account -40 USD ;; you paid

Later, your friend pays off:

2022-12-02 Bank transfer
Assets:Bank account 20 USD
Assets:Receivable:Friend -20 USD


If your friend paid earlier, you owe them money and it’s a liability.

2022-12-01 Shared expense
Expenses 20 USD ;; your share
Liabilities:Payable:Friend -20 USD

Later, you pay off:

2022-12-02 Bank transfer
Liabilities:Payable:Friend 20 USD
Assets:Bank account -20 USD


If your friend pays you in advance, you owe them money:

2022-12-01 Bank transfer
Assets:Bank account 20 USD
Liabilities:Payable:Friend -20 USD

Then you pay for the shared expense and your debt is fulfilled:

2022-12-02 Shared expense
Expenses 20 USD ;; your share
Liabilities:Payable:Friend 20 USD ;; their share
Assets:Bank account -40 USD


The fourth case where you pay your friend in advance and they pay for
the shared expense later is left as an exercise for the reader.

Jay Tindlebaum

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Dec 22, 2022, 3:25:54 PM12/22/22
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Thank you Ismael and Yuri for your feedback. @Ismael, that "reimbursments bucket" is a liability type account, right?

How about the following scenario: I received (from my wife) a bank transfer to be redirected (invested) in a fund? (Receiving bank account is just an intermediary account.) Here's the flow of the money in plain English:

1. money is transfered from wife's checking bank account to investing bank account
2.  money is transfered from investing bank account to the fund investment

Thank you.

o1bigtenor

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Dec 22, 2022, 3:42:13 PM12/22/22
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On Thu, Dec 22, 2022 at 2:25 PM Jay Tindlebaum
<jose.l....@gmail.com> wrote:
>
> Thank you Ismael and Yuri for your feedback. @Ismael, that "reimbursments bucket" is a liability type account, right?
>
> How about the following scenario: I received (from my wife) a bank transfer to be redirected (invested) in a fund? (Receiving bank account is just an intermediary account.) Here's the flow of the money in plain English:
>
> 1. money is transfered from wife's checking bank account to investing bank account
> 2. money is transfered from investing bank account to the fund investment
>
Hmmmmm - - - with the above you now crossed into a different kind of territory.

Ledgers are for keeping track of financial data.
They really don't care how you use them. (!!)
Double entry is nice in that its self checking.

The issue becomes when there is any kind of audit or challenge.
Friends paying part of the rent - - - that's one thing.
But when you're buying (I think the term is) fungible assets (you know the
things of 'value' (whatever that is!)) - - - - well
then things must change.

If the husband and wife decide to jointly have a securities account
- - - great - - - and then it doesn't really matter who bought what part of
what (until that nasty messy D thing comes along!). When cohabiting
persons do the same - - - - well - legally something different than
two individuals
living together happens (in Canuckistan it takes IIRC one year) - - - after
which assets are viewed differently by the courts if things ever get to such.

My caution is so that your ledger does not depict something that doesn't exist.

I would be careful to label an account as shared expenses - - - with
sub headings
for all items needed. Then you are documenting accurately what is.

(In case you think I'm over reacting - - - - was in business together with
my Mom for over 15 years. I thought I had protected myself with various
documents. Someone else took my mom to an attorney who proceeded
to issue a lot of other documents even though my mom was in that never
never land between being fully responsible and being incapable of
managing her own affairs. Someone else was given the authority to
manage everything. Almost all of my assets that I hadn't removed previous
to that point - - - - well - - - - someone else gave them away. Sorta an
expensive lesson - - - - so be careful out there.)

HTH

Ismael Bouya

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Dec 22, 2022, 6:27:18 PM12/22/22
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> Thank you Ismael and Yuri for your feedback. @Ismael, that "reimbursments
> bucket" is a liability type account, right?

I handle it separately, since it can go both ways (depending on whether
you owe money or your friend owes money). Jay’s suggestion separates
in two (so one asset and one liability) but it’s up to you if you want
to do it differently

> How about the following scenario: I received (from my wife) a bank transfer
> to be redirected (invested) in a fund? (Receiving bank account is just an
> intermediary account.) Here's the flow of the money in plain English:
>
> 1. money is transfered from wife's checking bank account to investing bank
> account
> 2. money is transfered from investing bank account to the fund investment

I would mark it as "She lent me money", and later "I reimbursed her"
(which is the known scenario already).
From my point of view I’m just a temporary bucket, I don’t care that the
money goes to an investment fund later. If I really want to know that it
went to a fund I’d just mark it as a note or as a payee or a tag.

If the fund is at your name you probably have a asset:fund bucket, in
which case the scenario is different: here you want (probably?) to track
which part of the fund is yours, and which part is your wife’s. In that
case I’d create a sub-bucket reimbursment:my-wife:fund, and the flow
would be
reimbursment:my-wife -> asset:banking
when she sends me the money and then two transactions
asset:banking -> asset:fund
reimbursment:my-wife -> reimbursment:my-wife:fund

--
Ismael

Jay Tindlebaum

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Dec 24, 2022, 10:32:37 AM12/24/22
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Thank your for your feedback, and Ajoeibin for sharing your story. What a hell of a experiencing!

This fund is essentially an retirement saving account with fiscal benefits... per person. So each of us has to contribute (with a minimum annual amount) to the saving account so we could reach the full fiscal benefit.

The "problem" is in the first step (transaction)--money transfer from each individual bank accounts to the invest bank account. Considering an example amount and the bookeeping in my *perspective*,  I account my money transfer as follows:

dr assets:invest bank:checking           2000 EUR
cr assets:my day-to-day bank:checking   -2000 EUR

No changes in my assets. Just moving them around.

Now, if I do exactly the same with my wife's contribution, that is,

dr assets:invest bank:checking                2000 EUR
cr assets:wife's day-to-day bank:checking    -2000 EUR

Then, I am incorrrectly increasing "my" assets. Should I consider my wife's contribution as an income? It is not an income, but at least it wouldn't mistakenly increase my assets.

Thank you.

José Terreiro

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Dec 24, 2022, 10:43:14 AM12/24/22
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Thank your for your feedback, and Ajoeibin for sharing your story. What a hell of an experience!

This fund is essentially a retirement saving account with fiscal benefits... per person. So each of us must contribute (with a minimum annual amount) to the saving account so we could reach the full fiscal benefits.

The "problem" is in the first step (transaction)--money transfer from each individual bank account to the invest bank account. Considering the bookeeping in my *perspective*,  see below how I've posted the money transfer (amounts rounded):

dr assets:invest bank:checking           2000 EUR
cr assets:my day-to-day bank:checking   -2000 EUR

No changes in my assets. Just moving them around.

I did exactly the same with my wife's contribution, that is,

dr assets:invest bank:checking                2000 EUR
cr assets:wife's day-to-day bank:checking    -2000 EUR

Then, I am incorrrectly increased "my" assets. Should I consider my wife's contribution as an income? It is not an income, but at least it wouldn't mistakenly increase my assets. Is there a better approach?

Thank you.

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o1bigtenor

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Dec 24, 2022, 11:24:40 AM12/24/22
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On Sat, Dec 24, 2022 at 9:32 AM Jay Tindlebaum
<jose.l....@gmail.com> wrote:
>
> Thank your for your feedback, and Ajoeibin for sharing your story. What a hell of a experiencing!
>
> This fund is essentially an retirement saving account with fiscal benefits... per person. So each of us has to contribute (with a minimum annual amount) to the saving account so we could reach the full fiscal benefit.
>
> The "problem" is in the first step (transaction)--money transfer from each individual bank accounts to the invest bank account. Considering an example amount and the bookeeping in my *perspective*, I account my money transfer as follows:
>
> dr assets:invest bank:checking 2000 EUR
> cr assets:my day-to-day bank:checking -2000 EUR
>
> No changes in my assets. Just moving them around.
>
> Now, if I do exactly the same with my wife's contribution, that is,
>
> dr assets:invest bank:checking 2000 EUR
> cr assets:wife's day-to-day bank:checking -2000 EUR
>
> Then, I am incorrrectly increasing "my" assets. Should I consider my wife's contribution as an income? It is not an income, but at least it wouldn't mistakenly increase my assets.
>

I would be very careful to note that the funds were moving from my
wife's checking account into a joint savings account from which the
funds would move to a joint investment account where it is a
registered investment item.

I'm guessing but I think that if you label the savings account
something like joint savings account that is only for funds destined
to the joint investment vehicle and its officially labelled as such
you should not need to move it through your income.
If that landing account (where the funds move through) is not labelled
joint - - - - well the issues just escalated and you might be
challenged on the funds moving through as to whether it might be
income for you.

If you don't label it clearly you going to both get taxed on it
because it would then be also part of your income - - - - don't think
you want that!!!

Accurate (and at least somewhat easy to understand) labels make for
less questions from those that aren't familiar with your system.

Yes I know this all sounds convoluted - - - these kind of details, imo
anyway, are important to keep others happy - - - not to keep you
happy.
(You might understand - - - - so might your wife - - - - - but don't
count on someone else 'understanding' - - - - especially if they have
any kind of axe to grind in the situation!!!)

(this is the joy of double entry accounting - - - - with accurate
labelling everything is trackable and then there will be fewer
'stupid' questions if there is anything like an audit or if the
frustrating D word shows up (or anything of that level of calamity!) -
- - you are NOT hiding anything and it is clear where funds came from
and where they went to and then the whys and wherefores and any other
questions are easily, one hopes, answered)

HTH
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