How do I account for a promise to pay something?

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How do I account for a promise to pay something?

Tim Wunder (Lists)
I made a promise to pay my church X dollars for their building fund over the
next 3 years. What's the best way to keep track of that?

Right now, I've created a liability, Liabilities:Promise, of $X, debiting
Opening Balances. When I make a payment against that liability, I credit
Checking and debit Expenses:Charity, and add a split to debit
Liabilities:Promise and credit Opening Balances the same amount.

Is there a better way?

Thanks,
Tim
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Re: How do I account for a promise to pay something?

Maf. King
On Sunday 23 November 2008 04:04:43 Tim Wunder wrote:

> I made a promise to pay my church X dollars for their building fund over
> the next 3 years. What's the best way to keep track of that?
>
> Right now, I've created a liability, Liabilities:Promise, of $X, debiting
> Opening Balances. When I make a payment against that liability, I credit
> Checking and debit Expenses:Charity, and add a split to debit
> Liabilities:Promise and credit Opening Balances the same amount.
>
> Is there a better way?
>
> Thanks,
> Tim

Hi Tim,

Sounds a perfectly reasonable way to keep track to me. IANAA!

Maf.


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Re: How do I account for a promise to pay something?

Derrick Hudson
In reply to this post by Tim Wunder (Lists)
On Sat, Nov 22, 2008 at 11:04:43PM -0500, Tim Wunder wrote:
| I made a promise to pay my church X dollars for their building fund over the
| next 3 years. What's the best way to keep track of that?
|
| Right now, I've created a liability, Liabilities:Promise, of $X, debiting
| Opening Balances. When I make a payment against that liability, I credit
| Checking and debit Expenses:Charity, and add a split to debit
| Liabilities:Promise and credit Opening Balances the same amount.
|
| Is there a better way?

You pretty much invented "Accounts Payable", which is simply the
accounting term/mechanism for a promise to pay.  This is very
reasonable.  You can create a scheduled transaction to help remind you
to make your gift on a regular basis and to simplify recording the
transaction.

My system for commitments to charitable gifts is to record only my
actual expenses in gnucash (essentially a cash basis).  I use SXes and
also have a spreadsheet to track and visualize what I committed to
versus what I already paid.  I have each month across the columns, and
each commitment down the rows.  When I write a check I fill in the
amount in the spreadsheet.  This allows me to easily see at a glance
which commitments I have or have not paid yet for each month.  (I
could also check each expense account in gnucash, but I find this
easier)  It also provides a nice set of running totals and some
summary computations for immediate up-to-date feedback.

-Derrick

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Many are the plans in a man's heart,
but it is the Lord's purpose that prevails.
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