Incorporation of P&L into balance sheet

[Derek Atkins]

James Leone <linuxcpa at netscape.net> writes:

> Ok, we've actually made a lot of progress on the year end dates.  You
> got the right idea.

Thanks.

> However,  Gnucash 1.84 will report an out of balance balance sheet,
> but it should be easy to fix.
>
> Right now the balance sheet is missing  Retained Earnings accumulated
> prior to the current reporting period.

*sighs* Yes, you are right..  My major issue with just using dates is
that dates are not necessarily the best way to decide whether a
transaction is in the "current" period or "previous" period.  For
example, assuming FY==CY a transaction from CreditCard -> Expense on
Dec 20, 2002 belongs in FY03 if the CreditCard is paid on Jan 12,
2003.  Just looking at the date of a transaction doesn't provide this
ancillary (yet important) information).

> 
> On the balance sheet....        Assets - Liabilities = Equity.
> 
> And....                                        Equity = (Opening
> Balances +current period profit & loss + retained earnings accumulated
> prior to the current period)
> 
> Ergo....algebraicly....
> 
> (Assets - Liabilities) - Equity = 0
> 
> (Assets - Liabilities) - (Opening Balances +profit & loss + retained
> earnings) = 0
> 
> (Assets - Liabilities) - (Opening Balances +profit & loss ) = Retained
> Earnings
> 
> Set your math this way, and add a line to show retained earnings, and
> _Guess What! ---> GnuCASH will support _Accounting periods!!!!!_   :-)
> * YOU DID IT! * :-)

Uh, not quite... See above for my reasoning of why this is not
sufficient.

> To avoid confusion on the balance sheet, you should label the balance
> sheet dates as "reporting period."

Sure, I can do this.

> Note that I really like the flexibility of GNU cash here with regard
> to reporting periods.
> 
> Gnucash will actually be _more_ flexible then Quickbooks!!!  :-)

Cool :)

> On a separate issue.....
> 
> If you run a profit and loss and click on a description in the profit
> and loss, you will see a list of all transactions from the beginning
> of time.
> 
> It would be more useful if it only showed the transactions that make
> up the total on the profit and loss.  After clicking on report, it
> would be useful to also be able to change the date range in the
> options tab.  This feature would not be used often, but would be the
> little extra that turned the ordinary into the extraordinary here.

Unfortunately this is rather challenging: there is no way (currently)
to encode the transactions that make up a value in such a way to cause
the callback to limit the search.  Part of the problem is that the
computation of the values is abstracted from the printing of the
values -- there is mapping of set-of-transactions to value (let alone
backwards).

So, dont hold you hopes up with this request. :(

> Good job guys!

Thanks,

> James Leone, CPA

-derek

-- 
       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