On Periods, Reports, and Cash v. Accrual Accounting

[Derek Atkins]

Hi,

Thanks for the reply.  It should have gone to the list, so I've
forwarded it there.  In the future please be sure to CC the list
when you reply to messages.

And yes, I acknowledge that a "13 period year" is something that we
should handle for end-of-year processing.

I'm not at all convinced that date-driven reporting is cleaner, unless
you mean Fiscal-date-driven (in which case I agree).  My point is
that we need some sort of transaction effective-date and search under
THAT date rather than the posted-date.  Yet once we start talking
about effective dates, we might as well talk about Periods.

-derek

Dan Means <dkmeans at srsconsulting.net> writes:

> The period approach is how commercial packages handle this -- you can
> define some number ot annual periods, and then attach a calendar date to
> it. 12 is not always the correct number -- you might want monthly (12),
> quarterly (4), or the infamous 5-4-4 (makes for even quarters even
> though the months are off -- which could also mean 13 accounting periods
> in a year...
> 
> There just needs to be a function that understands the dates.  Most
> packages also have some sort of "adjustment" period -- the place where
> all the year end tax mumbojumbo can be entered, which is not an
> operational in nature, but usually things like depreciation expenses
> etc. for tax returns -- but you have to keep your books in the U.S. the
> same as your taxes....
> 
> But if you could build a reporting engine that just used the periods,
> all would probably be okay, and if you messed up your period definitions
> -- well then you could get odd reports...
> 
> Date driven reporting is usually just cleaner. A balance sheet is a
> snapshot in time -- as of the close of business at a particular day. The
> P&L should be representative of activities over a defined period of
> time, perhaps a month or year. The balance sheet should be able to
> determine the balance for accumulated retained earnings from the P&L
> accounts...
> 
> Most commercial packages use some sort of metaphor for the "Year end
> close" to get clean cutoff for retained earnings vs. current year profit
> or loss...things can get dicey when people decide to "un-close"...or
> change their definition of a fiscal year...which is very common...so
> you'd need to add a "recalc" the period balances if it gets edited..
> 
> 
> 
> -- 
> Dan Means	
> SRS Consulting, Inc.
> www.teamsrs.com

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available