Delays in transfers between accounts

[Doug Laidlaw]

On Sat, 7 Jul 2007 07:45:10 am Daniel Carrera wrote:
> Andrew Sackville-West wrote:
> >> April  3: Bank A -> Transit
> >> April 10: Transit -> Bank B
> >>
> >> Now your GnuCash accounts will both match your bank statements.
> >
> > I'm not sure why this is an issue.
>
> We want the accounts in GnuCash to match the bank statements so that
> it's easy to verify that they are correct. Especially if there are
> additional transactions during the time period while the cheque is being
> cleared. If the dates don't correspond then transactions might end up in
> the wrong order. For example, it might look like your account had an
> overdraft that it never had.
>
> > If I write a check on July 7, and
> > mail it to my vendor, my register will show the check dated july 7,
> > but my statement will show the check clearing at some later date.
>
> It might be that for your personal situation the exact date is not
> important. I do have some account pairs where I wouldn't care much, and
> if we are talking about sending a payment out to a vendor I am likely to
> care less. But when I am making large transfers with a 3-week delay and
> making several transactions during those three weeks, I do want to see
> that my account was never $3,000 over-draft, and I do want to see that
> the payments and deposits in the same order that they actually happened.
>
> Considering how easy it is to keep track of transactions properly, I
> don't see any purpose in having a discrepancy between my GnuCash and my
> bank statements.
>
> Daniel.
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Banks get around the overdraft situation by posting credits before debits.  
Gnucash posts bank receipts (increase in asset=debit) before payments 
(credits.) so your books should never show a non-existent overdraft.  In any 
event, what matters is the state of your books and the bank balance at the 
end of any working day.

It is standard practice for your cashbook to show the date a check is written.  
That is what a Bank Reconciliation Statement is for.  To make one, first tick 
off all the cleared checks according to your bank statement.  Then you list 
the outstanding checks and total them.  Then you do this sum:

Balance according to Bank Statement:
	Less uncleared checks:
Balance according to cash book (Gnucash):

(This is in any book about elementary accounting.)

When I was a lawyer, I had to do that every month for my trust account, and 
keep the bank reconciliations to show my auditor.  Some people write the 
reconciliations in a separate book.  My list of accounts was small enough 
that the whole report went on one foolscap page.

Having checks outstanding at the end of the financial year is messy (I have 
one at the moment,) but there is no error in principle.  There is a 
reconciliation at the end of the year, and the outstanding check stays in the 
list of o/s checks until it is cleared.  I had non-businesslike clients who 
took months to bank checks.  Where would you record the check during that 
time?

If you do it your way, you will have trouble if your books ever have to be 
audited.  If you aren't using an accountant now, there is always a Taxation 
Department audit.  I suggest that you consult a local accountant to help set 
you up, even if you don't use one regularly.

HTH,

Doug
-- 
Judge a man by his questions rather than by his answers.
   - Voltaire