"Double Dating" transactions?

jdebert jdebert at garlic.com
Fri Sep 3 20:12:11 EDT 2004


[ obdisclaimer: I am not an accountant. My mother was. ]

[ obconfession: I am, though not entirely by choice, a part-time 
bookkeeper. ]

For more than merely balancing the checkbook or keeping a simple ledger, 
it is a really good idea to consult an accountant with regards to 
recordkeeping practice. It is also a really good idea to study (at the 
very least) bookkeeping.

Anyone in business, including self-employed, cannot afford not to have 
an accountant to consult with and cannot do without a good bookkeeper.

There are some good books on bookkeeping, which are intended for 
business. One very good book for the U.S. is "Keeping The Books" by 
Linda Pinson.

I have not found any good books on personal bookkeeping; the ones found 
so far are either far too simplified, dumbed down or are much too 
concerned with other facets of personal finance, most particularly with 
investing and "the importance of budgeting", giving bookkeeping only 
passing mention.


Backdating transactions is not a good idea. It can make things quite 
confusing. It may confuse you if you forget the details of the 
transactions when you look at them later. It will certainly confuse 
someone else. And it will eventually make for more work if supporting 
documents, etc., are needed.

Records should reflect when debits and credits actually occur. To do 
otherwise soon gets too complicated.

Reports typically also should reflect actual expenses and credits.

Some tax refunds are taxable in the year received. This is because some 
taxes paid are used to reduce federal taxable income within a tax year. 
Under U.S. tax laws this is acceptable practice. It is easy to get into 
trouble by misapplying tax refunds to another year. An accountant can be 
more helpful with this. A tax attorney is even better.

For reports it would be simpler to create new expense accounts for each 
tax year to record witheld taxes and taxes paid for the year and a cash 
account for each tax years' refunds.

Then when you know what your refund is going to be, transfer the refund 
amount from the refund account to that year's paid taxes account 
(whether witheld taxes or paid taxes is up to you), dating that 
transaction on the last day of your tax year. When you receive the 
refund, credit it to the tax refund account. Backdating in this way 
would be much easier to understand and recognize.

Of course, the refund account will likely be negative at some time but 
that should not be a problem. Considering the whole process, the reasons 
and intent should be obvious.

This way it is not necessary to back-date a tax refund received months 
or years later and supporting documentation does not have to be created.

This method will help document what is happening but it might initially 
look a bit dodgy to an accountant. It would help to use a note or memo 
with each transaction to explain what is happening. (It would be nice to 
attach an onmouseover, pop-up or "post-it" note to Gnucash transactions.)

The idea is to make each step and transaction obvious and self 
documenting, requiring no additional supporting documentation and 
explanation.

This should be simple. It just takes several more steps. It does the 
"double dating"--just in multiple steps.


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