Accounting periods problem

[James Kerr]

On Tuesday 11 Mar 2008, 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).
>

In February (the period to which the expense applies):

Dr Expense (e.g. Telephone)
Cr Liability (e.g. Accounts Payable or Accrued Expenses)

In March (or when the bill is paid):

Dr Liability (e.g. Accounts Payable or Accrued Expenses)
Cr Asset (e.g. Bank)


Jim