Accounting Question

[Paul Schwartz]

----- Original Message ----
From: Anthony <gnucash at inbox.org>
To: gnucash-user at gnucash.org
Sent: Saturday, October 14, 2006 7:50:17 AM
Subject: Re: Accounting Question

On 10/12/06, Paul Schwartz <pmjs1115 at yahoo.com> wrote:
> Perhaps it would not be as confusing if you had an account that you called "Reimbursements". However, it probably ought to go under the Income headings in order to maintain an accurate measure of Cash Flow. Same kind of reasoning applies to the "Expense".
>
> HTH
>
> Paul
>

Thinking about this a bit more, recording this as an expense and
income is almost definitely a bad idea.

Consider just a slight change, where instead of paying for a hotel
you're paying for a meal.

Meals and entertainment are generally only 50% deductible.  If you
recorded income and an expense, you'd have to pay taxes on the other
50%.  However, meals which are billed to a customer and separately
stated on an invoice at their full cost are 100% deductible.

So you definitely wouldn't want to just lump the cost of the meal into
an expense for meals.  To handle this situation I guess you could have
a separate expense account for reimbursed expenses, which would be
100% deductible.  But unless you're in the business of reselling
meals, I think this would overstate your revenues (which generally
doesn't matter for tax purposes, but might matter for other reasons).

Anthony
_______________________________________________

It is not unusual to have several different types of income and expenses. In this case your expense would be in a "not tax related" category as would the income of reimbursed business expense. Classifying them this way will keep both your cash flow and profit/loss reports straight.

At least that's the way I think about it. As ever IANAA.

Paul