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Guesty’s Accounting solution uses a method called double-entry bookkeeping, where each transaction recorded in an account requires a corresponding transaction in a different account. A combination of credits and debits are created automatically in Guesty to achieve this.
An increase in an asset account creates a debit transaction, while a decrease creates a credit transaction.
An increase in a liability account creates a credit transaction, while a decrease creates a debit transaction. See examples of relevant debit and credit transactions below.
Payment from a guest
When a guest pays for their reservation, two transactions are recorded.
- A debit transaction in the cash account. This indicates that money was received from the guest.
- A credit transaction in the advanced deposits account. This indicates that the guest is owed an equivalent service for their payment.
During the reservation
When a guest checks in or checks out, at least two transactions are recorded:
- A debit transaction in the advanced deposits account. This indicates that the guest has consumed the service they have paid for and they are no longer owed funds from the trust account.
- A credit transaction in the owner's account. This indicates that the owner is owed their share of the reservation from the trust account.
- A credit transaction in the accounts payable (PMC, vendors, tax) account. This indicates that the relevant parties are owed their share of the reservation from the trust account.
Payment to an owner
Post payments in Guesty when the owner is paid their share of the reservation. When the payment is added, two transactions are recorded.
- A credit transaction in the cash account. This indicates that money is transferred from the trust account to the owner.
- A debit transaction in the owners account. This indicates that the owner has been paid their share of the reservation from the trust account.
Payment to Property Management Company, vendors, and tax authorities
Record payments in Guesty when the property management company and the vendors have been paid, and when the taxes have been submitted to the relevant tax authorities. When these payments are added, at least two transactions are recorded.
- Credit transactions in the Cash account. These indicate that money was transferred from the trust account to the property management company, the vendors, and the tax authorities.
- Debit transactions in the Accounts Payable (PMC, Vendors, Tax) account. These indicate that the property management company and the vendors have been paid their share of the reservation from the trust account and that the reservation's taxes have been submitted to the tax authorities.