gnucash-user Digest, Vol 28, Issue 4

[Mark G. Woodruff]

From: JBW <figure8cutty at bigpond.com>
> Subject: loans

> I'm trying to figure out how to handle loans in
> GnuCash. 

As I understand it, you'll need a few accounts:

Assets:Home
Assets:Checking
Liabilities:Mortgage
Expenses:MortgageInterest

1. Borrow the money

Assets:Home            100,000
  Liabilities:Mortgage           100,000

2. Make a $500 payment of which $100 is interest:

Expenses:MortgageInterest  100
Liabilities:Mortgage       400
  Assets:Checking                500

You wrote a check for $500. They credited your
mortgage for $400 and took the rest as interest. Tag
the description with "Mortgage Repayment" and you look
up to see how much you've paid out. The balance of
Liabilities:Mortgage reflects how much you still owe
and Expenses:MortgageInterest how much you've paid so
far in interest. The "Mortgage Repayment" shows up on
your cash flow, the rest in your balance sheet.


From: Erik Evenson <erikevenson at earthlink.net>
> - It doesn't run on Cygwin.  I know there is a good
> reason, but I don't know what it is.  If it did run
> on Cygwin, I could use GNUCash on my laptop, which
> is hopelessly locked into an MS OS.

I'm running it under CoLinux using Cygwin/X to talk to
it under XP. Works reasonably well.


From: Neil Williams <linux at codehelp.co.uk>

> 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.

If you never have a VAT rebate or credit, then keeping
the basis with VAT works fine. However, the same
approach applies to shipping and handling anywhere.

If you order a book over the net, it's total cost to
you includes book, taxes (VAT/sales), and shipping. If
you want to keep track of shipping costs, to see if
you're really saving anything over buying locally,
then you need a way to split out costs of assets.

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

Managing stocks and bonds is just a subset of
inventory. Same principles apply, though.

> > Credit terms are fairly standardized now.
> 
> Where? Not in the UK - terms are a minefield of
> options and changes and are 
> changed without notice. 

Same in the US. Having an interest rate and a number
of days in each billing cycle would accomodate enough
people without too much pain.

> Make sure you've looked over the business features.

That I'll do.

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

Which defies all accounting standards.

One example of something GnuCash does that no
accounting would do. (This is the GAAP between GnuCash
and the real world.)

> >  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.

The item I'm left with isn't worth £1.50; it's only
worth a pound.

> 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.

Right. You need to keep track of both. But you can't
right down your inventory's value based on your last
sale. It always stays on the books at cost, whether
the inventory is apples, or Google shares.

> > 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.

Cost is what you bought your house for. Market value
is what your neighbor's house, of the same design,
just sold for. What your neighbor does doesn't affect
the cost of your house, so your house sits on your
books at your cost until you sell it, at which point
you realize a capital gain or loss.

If you fix it up, you increase your cost basis. If
something impairs the value of it (e.g. half of it
falls into the swamp before), then you'd put the
difference in a contra asset account.

Mark


		
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