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A worked household example
Follow income, reserves, a card purchase, a payment and reimbursement without counting money twice.
Start with money you have
These examples are independent illustrations in USD, with opening balances already recorded. Suppose Checking contains $2,000, there are no reserves or receivables, and the card owes nothing. Cash on Hand is $2,000. A reserve is part of Checking, not another bank account.
Set aside and spend
| Event | Checking at the bank | Reserves including cards | Cash on Hand |
|---|---|---|---|
| Start | $2,000 | $0 | $2,000 |
| Set aside $500 for insurance | $2,000 | $500 | $1,500 |
| Buy $80 groceries on the card | $2,000 | $580 | $1,420 |
| Pay the card $80 | $1,920 | $500 | $1,420 |
| Pay $200 insurance from its reserve | $1,720 | $300 | $1,420 |
Setting aside changes the purpose of money, not the bank balance. A discretionary card purchase sets aside the money to pay the card immediately. The later payment reduces both bank money and the card reserve, so it does not reduce Cash on Hand a second time. Spending from insurance reduces money already excluded from Cash on Hand.
Receive income and reimbursements
Receiving $1,000 salary into Checking increases Cash on Hand by $1,000. Paying $60 on behalf of another person from free money reduces Cash on Hand by $60 and increases the receivable. Their later $60 reimbursement clears the receivable and restores that $60 to Cash on Hand. It is repayment, not new salary.
Check the outcome
- Preview each event and inspect the accounts it touches.
- Compare Checking’s inclusive balance with the bank statement, including its reserves.
- Compare the card’s amount owed with its reserve on Credit.
- Use Activity to inspect the numbered revision for any unexpected change.