Accounting periods problem

[Mike or Penny Novack]

Wahur wrote:

>On Tue, Mar 11, 2008 at 11:56 AM, Elizabeth Dodd <edodd at billiau.net> wrote:
>
>  
>
>>You are apparently to use accrual accounting.
>>In our jurisdiction, some people are on accrual accounting and some are on
>>cash basis accounting (which you were using).
>>
>>If it is accrual accounting, it goes in on the month the bill gets to you
>>/
>>the month it refers to
>>not the month you pay it.
>>
>>You just have to adjust your dates to correspond to the Tax requirements,
>>not
>>to put in as date_paid.
>>
>>No accounting package I can imagine would do this automatically - it is a
>>case
>>of ensuring you enter for correct time period.
>>
>>Liz
>>
>>    
>>
>
>Nope. There are actually four time items to be recorde for every
>invoice/bill.
>Issue date, due date, payment date (those may be multiple), and accounting
>period the document belongs to.
>As I understand it, issue date should not determine accounting period, at
>least not always.
>Like in my example - my February phone bill (that should be accounted as
>February cost) was issued in March, so Gnucash considers it automatically a
>March cost.
>Of course, I might overcome this problem by saying that this bill was issued
>in February 29, not someday in March, but this would be poor workaround that
>just creates inconsistency between program data and paper trail.
>And i am quite sure that many accounting programs let you do that (at least
>thats what my auditor said).
>
>Wahur
>  
>
Liz gave you the correct description. There is no automatic setting up 
of accounts and how to use them for "cash" vs "accrual" accounting.

In pure "accrual" accounting the date the bill was RECEIVED isn't 
relevant. You would make the entry for this expense as estimated for the 
proper period (telephone expense for February/liability for unpaid 
bills) and then later when you paid the bill (liability for unpaid 
bills/cash). That puts the expense in the proper month. But of course 
you won't know the exact amount and correction entires are almost always 
required when doing "accrual" accounting. Discuss with your accountant 
what accounts you need and how they are to be used. It's not a GnuCash 
question.

Michael

PS -- In really nasty situations an entity might have to keep two sets 
of books, one on the "cash" basis and one on the "accrual" basis 
becausue different jurisdictions to which they must report don't agree 
on the requirement.

-- 
There is no possibility of social justice on a dead planet except the equality of the grave.