Re: question about posting

[Chris Travers <..hidden..>]

On Thu, Jun 10, 2010 at 5:03 AM, ario <..hidden..> wrote:
> Yes! Thanks to dwmbeancounter.com I now even do understand what you
> mean. What seems to make LSMB especially useful for us is the
> implementation of Projects and Departments with the possibility of
> creating a balance per department.
>
> Now there's one conceptual thing that I am still trying to figure out.
> And that's borrowing between departments. Our departments will
> constantly borrow cash from each others wallets and I have no idea how
> to implement that on de COA, while being able to constantly keep track
> of their balances for each department.
> Of course I could make liabilities and asset accounts that would look
> like:
>
> 1210    borrowed to dept 1
> 1220    borrowed to dept 2
> 2310    borrowed from dept 1
> 2320    borrowed from dept 2
>
> so that the balance would be reflected on each department's balance
> sheet, but of course would be zero on the company's balance sheet.
> I feel however as if it wouldn't be justifiable to use a company's asset
> (liability) account to reflect money borrowed by one department to
> (from) one of the other departments.

What I'd actually do is this:

1200 Borrowed assets from other departments
2301 Internal loan by dept 1
2302 Internal loan by dept 2

Then one tags the transactions as the borrowing transaction.  Then
your balance sheet will show how much departments owe eachother, but
won't be too specific.  Yet the departmental balance sheets will show
who money is owed to.  It would also allow a department to loan money
in other internal ways and have that show up in this way.

For example, suppose the company offers credit cards for business use
only to managers.  Suppose the credit cards sometimes have personal
incidental expenses that the company isn't willing to cover (aside
from misuse of cards, there could be legitimate reasons for such,
including anything from disagreements as to exactly what incidentals
would be covered to the fact that a given purchase might have a
mixture of items that the company was willing to pay for and those the
company was not).  These could then be treated as loans, using this
same system plus an additional account to track them as basically cash
advances.

Best Wishes,
Chris Travers