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I am doing double-entry bookkeeping with GnuCash to track my personal finances.

Sometimes I spent money on expenses which my employer is supposed to spent, and I later get reimbursed. For example, I might need to go on a business trip or visit a conference, and I pay the flight, hotel, conference attendance fees with my private credit card. A few months later I get the money back from my employer as part of my salary.

I am unclear how to reflect both the laying out of the money, as well as being paid back, correctly in my double-entry bookkeeping.

For example, I just paid conference attendance fees from my credit card. I made an asset "Money owed to me by my employer", and book the transaction as a credit in the credit card account (type: credit card), and as a debit in the "Money owed to me by my employer" (type: asset) account. Is this the correct way to do it?

In one or two months my salary will be higher exactly by the amount I have spent (I don't get interest). How do I book this correctly?

marked as duplicate by Ganesh Sittampalam, littleadv, Dheer, Joe, JoeTaxpayer Apr 25 '15 at 15:56

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  • Does your salary documentation include a line that says "reimbursement for expense"? – base64 Apr 21 '15 at 15:48
  • Are you familiar with the concept of "split transaction" in GnuCash? – littleadv Apr 22 '15 at 2:03
  • @littleadv: I have read about split transactions in the GnuCash Tutorial and Concepts guide, yes, but have never used them. So you are saying I should make a split transaction from my salary? I still don't understand how to book this. Split transaction into credit card account? Or reimbursement amount via checkings account into credit card account?! – user24385 Apr 22 '15 at 8:13
  • @base64: No, everything is just added together. But I know how much they reimbursed me because I know my exact salary and how much I am supposed to receive for reimbursement. – user24385 Apr 22 '15 at 8:14
  • You have two methods. One gives higher income and higher expense. Another gives lower income and lower expense. Both method gives the same Net Profit. Under usual accounting principles, it is better not to inflate income. Which method do you want? – base64 Apr 22 '15 at 8:20
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When you pay the flight, hotel, conference attendance fees of $100:

                                        DR      CR
Accounts receivable: Employer Name      100
    Liability: Credit Card                      100

When you repay the credit card debt of $100:

                                        DR      CR
Liability: Credit Card                  100
    Asset: Bank                                 100

When you receive the gross salary of $5000:

                                        DR      CR
Asset: Bank                             5000
    Accounts receivable: Employer Name          100
    Income: Salary                              4900

Your final balance sheet will show:

Asset
    Bank                                4900

Your final income statement will show:

Income
    Salary                              4900

Under this method, your "Salary" account will show the salary net of business expense. The drawback is that the $4900 does not agree with your official documentation. For tax reporting purposes, you report $5000 to the tax agency, and if possible, report the $100 as Unreimbursed Employee Expenses (you weren't officially reimbursed). For more details see IRS Publication 529.

  • Interesting, I was hesitant to use Accounts receivable because I thought this is only for business purposes, and wanted to use an asset for the outstanding money instead. Thanks, will try it this way. – user24385 Apr 22 '15 at 9:34
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    Use Asset instead. GnuCash docs says A/R is worthless when you don't have hundreds of customers. The nature of that Asset is still A/R in accounting sense though. – base64 Apr 22 '15 at 9:36