"Double Dating" transactions?

[Dave Reed]

Bill,

I replied to your off-list message to me. Here it is one more time and
to the list also. This is my last attempt at explaining it because
it appears I'm not explaining it clearly or it could be a language
issue. I would suggest you talk to a local accountant if you are still
having problems. See my reply at the bottom of this message.

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On Wednesday 01 September 2004 15:56, Bill Wisse wrote:
> On Wednesday 01 September 2004 08:13, Dave Reed wrote:
> 
> >
> >   I created a "Tax Refund 2003" account under the tax header, but 
this
> >   tax header, by itself, gives me a wrong figure because it takes 
away
> >   the refunded tax from the tax I already paid.
> >
> > The "Tax Refund 2003" account should not be under the tax header - 
it
> > should be an asset under your main Assets header (or an accounts
> > receivable asset if you have one) and I would call it "Tax Refund" 
w/o
> > a year so you can reuse it for each year. Here's how it works 
assuming
> > your fiscal year is the calendar year:
> >
> > 1. let's say you do figure taxes on Feb. 1st (you're in a hurry
> >    because you're getting a refund). On Feb. 1st you enter a
> >    transaction with a Dec. 31st (of the previous year) date using 
the
> >    Tax Refund asset account and the Tax expense account. Between
> >    Dec 31st and Feb. 1st your financial reports regarding taxes are
> >    not correct. But once you enter this transaction, your accounts 
are
> >    correct and you've indicated you will be receiving a refund (this
> >    is an account receivable).
> >
> > 2. let's say you get your refund check on April 30th. On April 30th
> >    (or whenever you deposit the check) you enter a transaction with
> >    that date using the Tax Refund asset account and the Cash account
> >    where you deposit the check.
> >
> > IANAA but I have read most of an accounting 101 book.
> 
> I don't know what Accounting 101 is.


Sorry, it means an introductory college level accounting textbook.


> > HTH,
> 
> Yes, this helps a lot.
> IIUIR, the moment I send my "Tax Return form" in, with in this case, a 
Tax 
> Refund  I create an Asset and the other account is A/R. Regardless if 
the tax 
> department accept my tax Return.


We're having some difficulty communicating. I'm saying you need to
create another "account/category" under the "Asset" tree and call it
"Tax Refund". If you already have an Accounts Receivable" account
(which I doubt you do from our previous mails) that is a subaccount of
the main "Asset", you can make this new account a subaccount of
that.

Yes, I'm entering the transaction assumeing the tax department will
agree with my tax return.


> When my cheque and explanation comes in, I either alter the amount or 
leave it 
> whatever the circumstances.
> I always waited until i got a response from the tax department and 
booking it 
> then on A/R didn't make sense.

In the U.S., we file our tax returns and if you owe them money, you
won't here from them. They will only contact you if they have
questions/concerns with your tax return. If they owe you a refund,
they just send you a check. 


> Is the above correct in what you're suggestion here?

I think so, but please give me a concrete example so I'm
certain. Here's an example from me. Let's say after figuring my taxes
in February I determine that I am due a $500 refund. This means my tax
expense account currently shows me paying $500 more than I owe for the
year, although it does match what I've actually paid. I now make a
transfer from the tax account to this new "Tax Refund" asset account
dated 12/31 so that the tax expense account shows what my actual tax
for the year was. The "Tax Refund" asset account has that amount which
I now expect to get back from the tax department.

When they send me the check and I deposit it, I make a transfer from
the "Tax Refund" account to my cash bank account, giving the Tax
Refund a balance of zero again.

Dave