Aug 2022
11:12am, 19 Aug 2022
138,453 posts
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GregP
Okay, thanks. That's instinctively what I would do - the only problem being that £10,000 of my balance isn't, as it were, real.
I'm struggling to explain what it is I'm not understanding. Let's try again.
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Aug 2022
11:14am, 19 Aug 2022
138,454 posts
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GregP
I have £30,000.
I buy a widget today for £10,000, but payment isn't due for a year.
So I've simultaneously got £30,000 and £20,000.
We need a pub/café/whatever that all Fetchies can decamp to in times of face-to-face need.
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Aug 2022
11:22am, 19 Aug 2022
65,066 posts
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GlennR
Good grief.
Today you have two classes of asset, cash of £30,000, Widget at £10,000. You have a single liability, a creditor of £10,000.
Net assets £30,000. As they were before you bought the Widget, until depreciation comes into play.
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Aug 2022
11:25am, 19 Aug 2022
138,461 posts
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GregP
Jeepers. Okay.
I have £30,000.
I lose £10,000 in a casino, but payment isn't due for a year.
So I've simultaneously got £30,000 and £20,000.
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Aug 2022
11:26am, 19 Aug 2022
8,997 posts
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Dooogs
If it were a company / org with Proper Accounts, you'd follow the Glenners model.
However for kitchen table accounts, I think just accounting on a cash basis* is fine. Right now, you still have £30k in cash. Theoretically, you could renege on that debt if you don't mind having the WidgetCo repo man after you...
*(government accounting didn't move away from this for Departmental accounting until the early 2000s!)
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Aug 2022
11:26am, 19 Aug 2022
23 posts
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Slowboy
What GlennR said. The bit you were missing is the creditor of £10k
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Aug 2022
11:28am, 19 Aug 2022
46,137 posts
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♪♫ Synge ♪♫
I suppose it depends on whether you are simply using the spreadsheet to track the cash that you receive, pay and have (ie a "cash book"), or whether you are wishing to wishes to track assets and liabilities as well?
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Aug 2022
11:29am, 19 Aug 2022
65,067 posts
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GlennR
Hi Slowboy.
It's the same principle with your casino example Greppers, except you now have net assets of £20,000, an asset of £30,000 and a liability of £10,000.
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Aug 2022
11:30am, 19 Aug 2022
46,138 posts
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♪♫ Synge ♪♫
The superfluous "to wishes" in that sentence may be removed to aid understanding.
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Aug 2022
11:33am, 19 Aug 2022
65,068 posts
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GlennR
I think that unless we are talking about something more than cash accounting there is no point in the example at all.
The reductio ad absurdum is that if I buy a house today for £200,000 on a 100% mortgage but the first mortgage payment isn't due until next month, am I really going to claim I have assets of £200,000 today?
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