"Double Dating" transactions?

[Nicholas Lee]

On Thu, 2 Sep 2004 09:45:47 -1100, Bill Wisse <wiswp at niue.nu> wrote:
> I agree, this is  what was suggested before, instead an Accounts /Rec was
> used.
> And this is  ONLY (IMO) correct if everything happens in the same financial
> year.
> But the moment the financial year is finished and you use your example:
> Expenses : withholding tax will be deducted from the current year and not
> from the previous year, which it really applies to.
> And when you do a Profit/Loss or Balance sheet , the ( possible)  Refund will
> decrease your expenses.

Timing issues are always complicated.  You should check with your
accountant, because it depends on the tax enviroment.

However, in simply terms. Ignoring AP or AR, because they don't matter
in this case.

Basically, you are paying your (withholding) tax as you earn.  Usually
if you are self-employed though or similar, there'll be some rebates
of something you can claim against your earns "in that tax year" to
reduce the overall annual tax for that year.  In the next tax year you
receive a rebate cheque from the tax department to refund the extra
money you paid in withholding tax.

Now, the true "tax expenses" for that first tax period, is the sum of
your withholding tax minus tax rebate you received in the second tax
period.  This lesser some should be the amount reflected in your P&L
(retained earnings).

The extra cash the IRS "owes" you then sits in a asset account, or a
libability account. Doesn't really matter. They are just labels.  A =
L + RE after all.

The balance sheet should reflect what is actually true at that point
in time, not what you want. Which might be the cash in the bank right
now.

To answer the finish question in this thread. Even when you have a
Journal with a build reversal date. You can't have an entry appearing
twice. That's like saying 1 = 1 + 1.

PS: My first message was meant to go to the list as well. Not sure I'm
liking this gmail interface for mailing lists.