Use case: rebates

[Neil Williams]

On Sunday 03 July 2005 4:48 pm, Mark G. Woodruff wrote:
> --- Neil Williams <linux at codehelp.co.uk> wrote:
> > | * the sales tax paid on it as both part of its
> > cost
> > | basis and as something I can get a report on at
> > the
> > | end of the year
> >
> > capital cost to Assets and the tax to an Expense -
>
> Sales tax isn't an expense,

It is in the UK, hence the difficulties of a portable implementation. Only 
larger businesses need to handle VAT calculations. To most UK account 
holders, VAT is an expense - part of the retail price of the item to such an 
extent that if an item is £10 without VAT, the customer is charged £11.75 and 
£11.75 goes into the Expense for that purchase. There is no separate sales 
tax accounting for most people in the UK.

> I suggest a better way to handle it is to have a flag
> indicating whether an item is taxable or not,

?? You appear to want inventory management. GnuCash does not do inventory, as 
yet. There is work being done on that.

> Terms of credit are established before, or during a
> purchase.

Then set it up as a credit agreement?

> That is, if I create a Credit Card account, 
> I should be able to enter the terms, e.g.:
> 12% annual, payments due the first business of the
> month, new purchases included in the interest
> calculations, cash advances charged 24% annual, etc.

Patches are always welcome.
:-)

> Credit terms are fairly standardized now.

Where? Not in the UK - terms are a minefield of options and changes and are 
changed without notice. You'd need to implement a full versioning system that 
can cope with the account before and after each round of changes to the 
conditions. Entering all that would be far more work than is necessary for 
most users.

I know I don't want to laboriously enter every point change in the interest 
rate of my credit cards. I just pay them off before interest is charged, it's 
far easier!!!!
:-)

> > | * the terms of the rebate
> >
> > A scheduled transaction?
>
> Nope. An Account Receivable. It goes on the book as
> having value.

Yes, an SX that uses A/R.

> Accounts Payable (Credit Cards, Notes) and Accounts
> Receivable all have terms.

Look at the business objects, bill terms are handled for invoices and bills 
along with the inevitable A/R.

> > And that is a GOOD THING. It's always good to follow
> > 'best practice'!
>
> Doing the one part of a best practice isn't the same
> as doing the whole.

Make sure you've looked over the business features.

> GnuCash's Balance Sheets are totally fubar'd. For a
> balance sheet (and double entry accounting) to be
> meaningful, everything must follow the cost principle.

That's inventory again, isn't it? GnuCash currently uses accounts and running 
balances.

>  If I buy two things today for $1, and sell one
> tomorrow for $0.50, my one thing remaining should
> still be on the books at $1.

That's inventory.

If you increase your assets by two transactions of £1 and reduce the assets by 
£0.50, you are left with assets of £1.50.

To get to a value of £1 you need to account for the loss on the sale. 
Currently, you're best doing that by transferring the £0.50 to an Expense as 
a cost. So 50p goes to some form of income and 50p to an expense of some 
kind.

To say that you have two items and that you've sold one item rather than had 
an income of £0.50p, you need inventory. If a grocer buys two apples for 10p 
each and sells one for 40p, he has one apple and 40p in cash. In terms of 
assets, that's 50p. In terms of inventory, it's one apple.

When I invoice a customer, if they don't pay the entire invoice I do not want 
GnuCash telling me that the account is settled in full - the running balance 
of the account is not zero.

> Market value does not 
> belong on a balance sheet (unless an asset is
> impaired, of course)!

?? I've got assets for my house and my car. Market value is all I have and I 
need to have that showing up. For UK tax purposes, I implement certain 
depreciation rules for capital allowance that work solely on the original 
purchase price.

> GnuCash does some things an accountant would expect,
> and some that are totally wrong.

in your humble opinion - I've yet to find GnuCash doing anything that my 
accountant would not have done.

-- 

Neil Williams
=============
http://www.data-freedom.org/
http://www.nosoftwarepatents.com/
http://www.linux.codehelp.co.uk/

-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/pgp-signature
Size: 189 bytes
Desc: not available
Url : http://lists.gnucash.org/pipermail/gnucash-user/attachments/20050703/f00aefcb/attachment.bin