- Credit Card
- Real Estate
Context: I am new to double-entry accounting, I use GnuCash for my personal family bookkeeping. At the moment, the main goal for me is to keep track of incomes/expenses of our family over time. For this, I am sorting the flow of cash from income accounts to assets (checking/savings accounts & credit cards) to the individual expense accounts and generate monthly income vs. expenses reports.
Problem: Following double-entry accounting tutorials, I set up a mortgage loan as a liability account to which monthly installments are paid and interest is handled too. At the moment, the set up is such that every month there is a single transaction withdrawing money from the checking account (Asset) and putting it directly to the mortgage account (Liability), thus decreasing the loan. The problem I have is, that the mortgage installments do not appear on the income/expense reports, since, as set up, the installments are loan repayments, not expenses. However, privately, I want these installments to be included on the monthly expense report, since from our family’s perspective, they behave as such. The idea is to treat mortgage installments similarly to how we treated rent when we did not have a mortgage yet. (also, purely technically, GnuCash seems to refuse to include transactions to liability accounts in the Income/Expense reports)
Question: How should I set up the accounts and the transactions so that the 1) balance will be as it should be (no virtual money involved), 2) mortgage loan will be repaid every month as it indeed is in the bank, while at the same time 3) the mortgage installments will appear as expenses too.
I am interested in what are the standard accounting practices. I guess, some companies would like to see their monthly cash flow related to long-term loan repayments/installments also rather as expenses which need to be “earned for” every month.