Payroll take 2

[Jon Lapham]

Aldous Everard wrote:
> I like the trimmed down look, no extraneous distractions.  Also very
> useful for a complete beginner like me to see more of how it works.
> 
> Shouldn't the taxes only show on the Liabilities though, until they are
> transferred to the Expenses account, at which point they come off
> Liabilities? thus:

If I understand you correctly, no, because the only way you can make a 
liability is through an expense account (or by increasing your assets).

Remember, you have to keep this equation balanced:
Assets - Liabilities = Equity + Income - Expenses

> 
> Before payment of tax:
> 
> -Liabilities    800
>    -Tax1	500
>    -Tax2	300
> -Expenses       1700
>    -Salaries    1700
>    -Tax1        0
>    -Tax2        0

The salaries expenses are balanced with the checking account (that isn't 
shown), no problem.  But how do you account for the 800 in liabilities 
at this position?  You either have to expense 800 or gain 800 in assets.

At this point, the Balance equation above is not.. well... balanced.

> After payment of tax:
> 
> -Liabilities    0
>    -Tax1	0
>    -Tax2	0
> -Expenses       2500
>    -Salaries    1700
>    -Tax1        500
>    -Tax2        300

When you pay the tax, you simply make a transaction between the asset 
(checking account) and the liability.  Expenses are not involved.


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  Jon Lapham  <lapham at extracta.com.br>          Rio de Janeiro, Brasil
  Work: Extracta Moléculas Naturais SA     http://www.extracta.com.br/
  Web: http://www.jandr.org/
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