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I only recently started to document my financial administration properly. Before, I had an Excel file with all transactions of my bank account (and a separate one for my savings account). Recently I decided to try GnuCash for my financial administration. However, I am having trouble finding the right way to deal with the following situation:

In my personal financial administration I have an expense where I paid something for myself and a friend, for instance drinks at a bar, say 50 euros. Later, that friend reimburses me for his half, 25 euros.

In my former administration framework, I would add both transactions to the same "category" (say "Bar"), resulting in a net of 25 euros of expenses for that category.

However, in double bookkeeping I feel like this is not the proper way to document these transactions. Specifically, I would like the monthly reports of my bank to match the reports GnuCash makes, as follows:

For example, my bank would say that 1025 euros were desposited (1000 salary, 25 reimbursement), and 750 withdrawn (700 monthly expenses, 50 for the drinks), while GnuCash would say 1000 euros were deposited, and 725 euros were withdrawn (assuming I add the reimbursement as an expense, in effect lowering the total amount of money on expense "Bar").

On the other hand, I would like to somehow note that the 25 euros I received from the friend were in fact reimbursement for a payment made in the "Bar" category, so that the GnuCash report says that a total of 25 euros were spent on category/expense "Bar", since that is the actual amount of money that I spent on it.

Since I am new to properly doing personal finance like this it is entirely possible that this is not how finance is done, and what I am trying to do should be documented otherwise. If so, how would such a set of two (or multiple?) transactions be documented?

Finally, excuse me if my (financial) terminology is incorrect.

  • Not a full answer, but an opinion: How you decide to organize and arrange your finances is completely up to you. Since you are new to gnucash, I would recommend try entering things a few different ways to see what they look like in your transaction register. It's often possible to go back and change it afterwards. Then develop a consistent accounting system for when you receive reimbursements. I personally would create a 50 EUR expense, and then a separate 25 EUR reimbursement, but that's my system. – ender.qa Aug 23 '18 at 12:05
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That sounds very easy to me and I do it all the time (and even way more complex). I think you just need splits.

For your example: First, you need to have the 50 EUR somewhere. Let's assume it's in your wallet. Then you have a transfer was follows:

Assets:Wallet                                       50
                    Expenses:Bar            25
                    Assets:Lent:Friend      25
                    Assets:Wallet                   50

As you see, you make a split of the 50$ into your expenses account (Expenses:Bar) that accounts for your stuff. The other half you give into an account that organizes what others owe you. There are multiple ways to do this but I think an "asset" is the best form to keep track of this and I have a category "Assets:Lent". It contains sub-accounts for all people I frequently do this. If this happens just once I have Assets:Lent:Others.

Then later, your friend gives you the 25 back. Does not matter if cash, bank transfer, paypal/venmo... you just do a simple transaction. For example with cash:

Assets:Lent:Friend                                  25
                    Assets:Wallet           25
                    Assets:Lent:Friend              25

After that Assets:Lent:Friend will have zero balance, meaning that your friend does not owe you anything anymore.

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