A bit thick on how to handle GST

[Robert Graham Merkel]

alistair clethero writes:
 > Folks
 > 
 > Can anybody explain to me the following on GST ? I've read some previous
 > emails and i think i'm on the right track but i'm no accountant...
 > This is simplified since i guess i would be using expense and income
 > accounts somewhere.
 > 
 > I purchase widgets for $1000 plus GST tax  at 10% of $100, then
 > 
 > my bank gets CREDITED, which is an ASSET account - the credit sends the
 > balance down by $1100
 > my INVENTORY account gets DEBITED, which is an ASSET account - the debit
 > sends the balance up by $1000
 > my GST PAID account gets DEBITED, which is an ASSET account - the debit
 > sends the balance up by $100
 > 
 > so i spent $1100, and the value of my assets has increased by $1100.
 > 
 > Is this right? Is GST really an ASSET? To the business it has no real
 > value unless the GST paid can be passed on to others if the goods are
 > resold? So therefore if goods are resold it's an asset? If not it's
 > a...?
 > 
 > I sell widgets for $1000 plus GST tax  at 10% of $100, then
 > 
 > my bank gets DEBITED, which is an ASSET account - the debit sends the
 > balance up by $1100
 > my INVENTORY account gets CREDITED, which is an ASSET account - the
 > credit sends the balance down by $1000
 > my GST COLLECTED account gets CREDITED, which is a LIABILITY account -
 > the credit sends the balance down by $100
 > 
 > Appreciate any thoughts on the above, I'm afraid I'm not hot on
 > accounting, even with a book.

GST handling can be tricky.  The approach you've described above
should certainly work.

What we really need, however, is to fix gnucash to aid the process of
GST collection.  This may involve a new type of account - "GST", where
both GST collected and GST paid are stored.

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Robert Merkel	                           rgmerk@mira.net

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