[Kmymoney] Just getting started...

[Thomas Baumgart]

Hi,

On Wednesday 01 January 2014 20:33:26 JEFF VANDERDOES wrote:

> Hi all,
> Just getting started with KMyMoney and worked through several things today. 
> One issue I faced maybe someone more knowledgeable might be able to shed
> some light. I'm trying to track my accounts at my credit union.  I'm been
> successful in linking everything up but one account.  I have a "Line of 
> Credit" so when I go past 0.0 money is moved from Line of Credit (LOC)
> account to checking account. For example say my checking account has $2.00 
> I write a check for 10.50.  9.00 increased in LOC account and 9.00 is added
> to checking making it 11.00.  Then the check goes through reducing checking
> account to 0.50. Essentially LOC acts as a loan.  I can reconcile from
> credit union etc.  When I create account as liability, loan, etc account
> instead of the 9.00 transfer from loc to checking it reduces the amount
> rather than increasing it.  What kind of account should my LOC be?
> Thanks,Jeff

That is perfectly OK, as the sum of all accounts must remain 0 in double entry 
bookkeeping (which is what KMyMoney is based upon) when entering transactions.

So given your example, 4 accounts are involved (to simplify things I leave out 
the actual history of your checking account here):

- The checking account C
- The Line of credit L
- The opening balances O
- The expense category E

In the beginning you have your checking account with an opening balance of 2$. 
The opening balance account is simply used to balance the initial state. So 
the account balances are as follows:

C = 2, L = 0, O = -2, E = 0

Sum of all balances is zero. Now looking at your purchase and transfer you 
have the following balances:

C = -8,50, L = 0,  O = -2, E = 10,50  (expense part)
C = 0,50,  L = -9, O = -2, E = 10,50  (LOC transfer part)

The sum always adds up to zero.

The balance of a loan is shown with reverted sign in some views (e.g. in the 
ledger view) but not in all others. That is probably confusing you.

So from an accounting standpoint of view, a liability is exactly what you need 
here, because it will give you correct numbers when looking at your net worth.

Hope that helps you to understand what is going on. If not, or if this is 
unclear, please let us know.

-- 

Regards

Thomas Baumgart

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