Startup questions for new business

[Maf. King]

On Tuesday 09 Nov 2004 06:06, tufkal wrote:

>
> 3) I bought an item at a local store and resold it.  I entered the item as
> an expense from Asset:Checking->Expense:Inventory.   Then I got paid for
> the job I did, which was parts and labor.  $80 in labor and $99.99 in
> parts.  The expense of the part was $69.99.  How do I correctly recieve
> the money against the invoice, paying the Inventory account off and
> showing a profit?  Basically, how do I process inventory (no tracking
> needed), just the cost/profit.

Hi  Tufkal.

Right - I've done some thinking and tinkering in GC.  once again, IANAA, and 
this is all based on my experience and understanding of UK accounting 
principles. YMMV.

I _think_ that if you want to process inventory in the way you describe above, 
then inventory is an asset, not an expense.  

1.) You buy the item, and it is not an expense, it is a transfer from 
checking -> asset:inventory

Your net worth hasn't changed, instead of $100 cash at bank, you now have $30 
cash, and inventory worth $70 (I'll round the .99, if that's ok with you!)


2.) you receive a cheque for $180 for the work done.  this is deposited in 
your checking account.  (I'll keep it simple and not involve the A/R section 
of gnucash here)
This transaction is recorded as a split in the bank register - 
Checking  CR 180
Assets:Inventory	DB 70
Income:Invoice	DB 110

That way, Inventory hits £0, income is shown as £110, bank balance is £210, 
profit is shown as $110

Does that show you what you want?

Maf.