Using gnucash to track a couples' joint account?
February 19, 2012 12:36 PM   Subscribe

How should we set up gnucash to track a couple's cash flow and joint account?

We have a joint checking account, which we use for daily expenses like groceries, utilities, and eating out. In principle, this should be simple: each month we each contribute some amount to the joint account, and then we pay for our joint expenses directly from that account. In practice, it's more complicated, because we don't follow the rules: I might buy groceries using my own credit card, and then I resolve this by either directly taking money from the joint account to pay me back for the groceries, or I transfer less money into the joint account to make up for what I'm owed.

We are trying to start using gnucash to keep track of all of this. The problem is that we're new to double-entry bookkeeping and we're very confused about how to set up the different accounts and types of transfers. What's the right bookkeeping way to track the "income" our joint account does or should receive each month from each of us? Should we be using accounts receivable as a way to track how much we've actually paid versus what we should pay each month?
posted by lab.beetle to Work & Money (6 answers total) 1 user marked this as a favorite
Money from one account of yours to another isn't income - the two entries are the one in one account and the one in the other.

Income is money that comes into the system from outside - salaries, interest, gifts, etc. Not money that moves around within the system.

I can't speak to the "accounts receivable" side of it - I use exactly your system (with gnucash as well) and I just have an automatic bank transfer to make sure the right amount goes into the joint account every month.
posted by emilyw at 12:46 PM on February 19, 2012

If you have two accounts and you're transferring cash between them, one account shows a debit and the other shows a credit. The net result is a wash, i.e., $0.

So, you have Account A and Account B.

Account A transfers $1,000 to Account B.

In Account A this transfer will appear as: "Debit: Account B $,1000."
In Account B this transfer will appear as "Credit: Account A $1,000."

Remember, debits should be read as negative numbers and credits should be read as positive numbers.

-1,000 + 1,000 = 0.
posted by dfriedman at 12:51 PM on February 19, 2012

Think of your bank account as a separate fund. You put money in, you take money out. It seems like you want your fund to have five accounts: Cash, Due To So-and-So (or Accounts Payable), Expenses, Revenue, and Fund Balance (or Retained Earnings). Cash (Asset) has a Debit balance. Due To So-and-So (Liability) and Fund Balance (Equity) have credit balances. At the end of the day (or fiscal year), Assets = Liabilities + Equity.

(I've used governmental accounting terms (Fund Balance, Due To) rather than financial accounting terms (Retained Earnings, Accounts Payable) because I think for your purposes its easier to think of your bank account that way. I've never used gnucash, so I don't know what account titles are available to you.)

(On preview, my lack of html skills made the entries look like crap, but Dr. means Debit and Cr. means Credit. Usually the credits and credit amounts are indented.)

1. When you set up your fund, think of the cash that you put in as revenue for your fund. Debit Cash for some amount, and credit Revenue for the same amount:

Dr. Cash XXXX
Cr. Revenue XXXX

2. When you spend money from the fund, debit Expenses and Credit cash:

Dr. Expenses XXX
Cr. Cash XXX

3. When you pay for something from your own pocket, debit Expenses and Credit Due to So-and-So (you can put in your name or whomever. You can have as many Due To accounts as there are people, or sources, being owed money to):

Dr. Expenses XXX
Cr. Due To So-and-So XXX

4. When the fund reimburses you (that is, when you pay yourself back), Debit the Due To So-and-So account, and Credit cash for the same amount:

Dr. Due To So-and-So XXX
Cr. Cash XXX

5. To close your books, debit Revenue for whatever amount is in the account (that is, how much cash you put in) and credit Expenses for whatever amount is in the account (how much you spent). If there is any excess Revenue, credit Fund Balance for that amount. If there are excess Expenses, debit Fund Balance for that amount:

Dr. Revenue XXXX
Cr. Expenses XXX
Cr. Fund Balance X

Thus, any excess of Revenue over Expenses should be credited to Fund Balance. This Credit balance should equal the Debit balance of the Cash remaining in your account. If don't have any cash in the account, the Due To (Liability) should equal the Debit balance of the Fund Balance (Equity), meaning that your fund owes somebody (which in this case would be you or a spouse or whomever).

An Income Statement (or more appropriately a Statement of Revenues, Expenses, and Changes in Fund Balance) would show your Revenues minus your Expenses, and whether the remainder is positive (Credit to Fund Balance) or negative (Debit to Fund Balance).

Revenues +
Expenses -
= Fund Balance

A Balance Sheet (or more appropriately a Statement of Net Assets) would show your Cash and the Fund Balance and any Liabilities, if you have them.
posted by fryman at 1:58 PM on February 19, 2012

I want to add that you can certainly use an Accounts Receivable (or a Due From So-and-So), but this would only really be used at the start of the month or fiscal year, or whatever. It would be an Asset account with a debit balance.

For example, if your fund needs to have $1,000 put in each month, $500 from Person A and $500 from Person B, the journal entry for your fund would just look like:

Dr. Cash................1,000
Cr. .....Revenue..............1,000

However, lets say Person A could only put in half of their amount. Then the entry would look like:

Dr. Cash......................................750
Dr. Due from Person A....................250
Cr. ......Revenue.................................1,000

Meaning that your fund is expecting to collect $250 from Person A. At close of the fiscal period, your Due From account would be listed as an asset, along with Cash. However, you would only use the Due From/Accounts Receivable account when you're putting money into your fund, never when you're using money from your own pocket to pay for your fund's expenses.
posted by fryman at 2:17 PM on February 19, 2012

Or you can use Mint to track expenses and then you don't have to enter them manually. I find having a joint credit card and separate banking accounts to work out best for my husband and I.
posted by source.decay at 3:34 PM on February 19, 2012

Thank you all for your help, especially fryman - that seems like exactly what we're trying to do.
posted by lab.beetle at 8:10 PM on February 20, 2012

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