Re: question about posting

[Chris Travers <..hidden..>]

On Tue, Jun 8, 2010 at 10:08 PM, ario <..hidden..> wrote:
> Good day,
>
> I've got just newly involved in both accounting and ledgersmb, so I'm
> afraid this won't be my last posting to this list :)
>
> For a farm that's growing rice among other products I'm trying to set up
> an accounting system and I chose for LedgerSMB.
>
> So here's the deal:
> For the preparation of seedlings, somebody is plowing a seedbed where
> the seeds will be sown for later transplantation in the rice field.
> For this I created the account:
>
> 1. 5220 cogs/madboat seedbed
>
> As I understand from my newly acquired knowledge about accounting,
> things that add to assets are 'debited' and items/money that go out of
> the system are 'credited' in the books.

That's correct.

> So I was considering entering the following in the general ledger:
>
> Department: rice field 1
> Project: first cropping 2010
> account debit   credit
> 5220            400
This is an expense, right?  It should be a debit.

> 2100            400
This is a liability, right?  Credit is right.

> but I'm afraid this doesn't make sense, because whenever I push the
> 'update' button, it adds a new line with account nr. 1010 in the
> transaction window.
>
> I was thinking along the line: plowing (5220) costs money (400) so
> that's put on the credit side, accounts payable (2100) will increase the
> liabilities (400) so that's also put on the credit side. However, I
> don't think an entry like this will balance.

Right.  Because neither of these are assets.  Your liability side
should go on the credit, and the balancing expense side goes in as a
debit.

Best Wishes,
Chris Travers