Recording Income and Expense Transactions in Gnucash

It is important that transactions are entered into the books consistently and clearly.

An easy way to think about how to enter most common transactions is to imagine them as if it were all written out as a check.

If you write a check to the phone company it likely has this information on it:

• Your name (printed on the check)
• The phone company's name (written in the "Pay to the order of" line)
• A date
• An amount
• A note (down in the corner, for example "Service for January 2009")

In the books we want much of the same information, plus we need to know what account to associate the transaction with.

Reimbursement Example

This is the most common type of transaction that gets goofed up.

Let's say that Sue spends $10.15 at Safeway for donuts to feed the volunteers and she brings a receipt to the cashier in the thrift store. She gets a reimbursement receipt properly filled out and she gets her money back. The next morning we need to enter this transaction into the books.

Think of as if we paid directly by check. We would make out the check to "Safeway". The date and the amount would be recorded. The note would say something like "Donuts for volunteers". We also know this money came out of the store's till.

In the books, we'd find the store till's account (Assets:Cash:Thrift Store) and record the transaction like this:

1. Safeway would go into the description for the whole transaction. Now we know where the money actually went.
2. Donuts for volunteers would go in the description for the corresponding expense line item (Expenses:Inreach:Volunteer Rewards)

A very common problem is when there is no description we don't know how to record the transaction. Note that the descriptions should not say something like "Volunteer Rewards". That information is obvious because of the expense account.

The description should always justify why we recorded that expense in that account. If we don't do that, then anyone could use the money for anything and simply say it was for volunteer rewards (or whatever). For example I could pay for an airline ticket to the Bahamas and describe it as "Action:Tools". Unless we record (a) where the money went (Bahama Airlines) and (b) why it went there (Airline Ticket) we wouldn't know if there was a problem or not.

Miscellaneous Income Example

Let's say that Joe's Trucking comes in with an old invoice (number 12345) and pays the front desk $40.00 for it. The next morning we need to enter this transaction into the books.

Think of as if we received a check from Joe's Trucking. It would have their name printed on it. The date and the amount would be recorded. The note would say something like "Paid Invoice #12345". We also know this money went into the front desk's till.

In the books, we'd find the front desk till's account (Assets:Cash:Front Desk) and record the transaction like this:

1. Joe's Trucking would go into the description for the whole transaction. Now we know where the money actually came from.
2. Paid Invoice #12345 would go in the description for the corresponding income line item (Income:Donations:Invoiced Donations)
3. In this example, it also makes sense to record the invoice number in the number field of the transaction, since it will make it easier to find what was paid for.

They might not actually give us the invoice number, so it might take some investigation to look it up. But it's good to do that for two reasons:

• We need to resolve the proper invoice in the database anyway.
• We need to know what they were paying for (fees, donations, store items?)