How do I do this? (Accounting question)

[Conrad Canterford]

I have some conceptual problems which I'm hoping someone will be able to
explain for me. Since they are not specifically gnucash related, private
response may be warranted.

My problem:
I have, up to now, been entering stock (as in, the stuff I sell, not
shares in companies) purchases as expenses, and not keeping any sort of
accounting in Gnucash of my stock on hand. This is entered in the
double-entry stuff as a deduction from the cash account, and an addition
to my "Expenses:Stock:xxxxxx" account (depending where it was bought
from).

However, we are about to get big enough to start worrying about the GST
("Goods and Services Tax"), and this really starts to make it more
important that I keep track of my stock on hand as well. My problem is,
I cannot visualise how to enter this.

I need to deduct money from the bank account. Some of that goes as a
pre-paid GST, and the rest is an expense for stock purchase. However, I
also need to add that same amount to an asset account "Stock on Hand",
don't I? I could enter it straight to the asset account, and not record
the expense, but then how do I track my total stock purchases?

Similarly on a sale, some of the money goes as a liability for GST
payable and the remainder is income, and all of that goes into the cash
account. But I also need to deduct the cost of goods sold from my "Stock
on Hand" asset account to get that to track properly. I cannot bypass
the recording of income - I need this for my tax declarations.

So
a) How would this be done in a normal double-entry accounting system?
b) How do (can?) I do this in Gnucash?

OK, this should probably go to the other list (what was it called?
gnucash-help?) rather than gnucash-devel but I have more faith that the
people on this list will give me a sane answer. In any case its a
development issue for when Gnucash tries to break into the business
market  :-).

Conrad.
-- 
Conrad Canterford (conrad@mail.watersprite.com.au)
Water Sprite Pty Ltd   | info@mail.watersprite.com.au
 GPO Box 355,          | Incorporating:
 Canberra, ACT, 2601   |   Australian Tour and Event Management (ATEM)
 Australia.            |   Ticketing Services Division
Phone: 0419 122 553    |   Catering Services Division