Easy Books (or any double-entry accounting) Question

[Tknull]

I have been using Easy Books for my business for a while, and love it. But I have one confusion/problem.

I have the business checking account set up in the Bank Accounts category. I am not sure what method is proper to use for cash withdrawals or deposits to the business (as equity) by me. For example, if i pull $200 cash out of the business, and don't want to expense this in any way, just want to lower the equity value of the business, what do i do? I have set up a petty cash account called "drawing account", which i use to sent money to or from the checking account, which allows me to keep the business checking account at it's proper balance, without having to create an expense where none exists. Until now, i just ignore the balance of that "drawing account." This would be fine, except it makes the balance sheet meaningless.... as it lists the drawing account as an asset.

I don't see any other account/method of doing it that fixes this. I tried creating an account under the equity category... but likewise it shows up on the balance sheet. All i want on the balance sheet is business checking account, plus customer balances owed me, minus debt i owe to suppliers, etc.

Any help here would be awesome.

T.

 

[snberk103]

OK... I am not an accountant, and really - should get an accountant's advice. However, I can tell you how we did it.

In out case my business is incorporated, but I don't think that makes a big difference. But I could be wrong.

When we started the business we gave the business a bunch of money to start, and it was noted on the balance sheet as a Liability, under the line item "Shareholder Loan". When I take money out of the business, I take it from this Shareholder loan account. What this means is that the business owes me less money - and that the business liabilities (e.g. accounts payable) have decreased. If I want to put money in, I put it into this account as well.

For you your books, you would make balancing Debit and Credit entries in the Shareholder account, and the bank account (an asset). The balance sheet stays balanced because while the asset account has decreased/increased the liability account has also increased/decreased by the same amount.

May not apply to you... so check first. But I hope this helps.

Luck.

 

[Tknull]

OK... I am not an accountant, and really - should get an accountant's advice. However, I can tell you how we did it.

In out case my business is incorporated, but I don't think that makes a big difference. But I could be wrong.

When we started the business we gave the business a bunch of money to start, and it was noted on the balance sheet as a Liability, under the line item "Shareholder Loan". When I take money out of the business, I take it from this Shareholder loan account. What this means is that the business owes me less money - and that the business liabilities (e.g. accounts payable) have decreased. If I want to put money in, I put it into this account as well.

For you your books, you would make balancing Debit and Credit entries in the Shareholder account, and the bank account (an asset). The balance sheet stays balanced because while the asset account has decreased/increased the liability account has also increased/decreased by the same amount.

May not apply to you... so check first. But I hope this helps.

Luck.

Hello,
Thanks for replying.
So i did as you said you do, and changed my "Drawing Account" from a Petty Cash account to an equity account. It does seem to solve the problem. I can now look at my net assets and it is correct.... i had tried this once before and didn't think it was working right. But it seems to be good. Certainly better than it was before.
Thanks again.
T.