gnucash-user Digest, Vol 67, Issue 36

Benjamin Smith bjnsmith at gmail.com
Fri Oct 31 00:15:15 EDT 2008


Thanks for the response. I'm in the US. Perhaps most business users out
there have an accountant file there taxes.

On Thu, Oct 30, 2008 at 10:00 AM, <gnucash-user-request at gnucash.org> wrote:

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> Today's Topics:
>
>   1. Re: how to view total for expenses subaccount (Phil Longstaff)
>   2. I want to track sales tax, but I also want the cost of an
>      item to   include sales tax - how? (jgombos)
>   3. Re: how to view total for expenses subaccount (Donald Allen)
>   4. Re: I want to track sales tax,    but I also want the cost of an
>      item to include sales tax - how? (Derek Atkins)
>   5. Re: how to view total for expenses subaccount (Derek Atkins)
>   6. Re: help: tax prepration software (Eric Morey)
>
>
> ----------------------------------------------------------------------
>
> Message: 1
> Date: Thu, 30 Oct 2008 09:06:45 -0400
> From: Phil Longstaff <plongstaff at rogers.com>
> Subject: Re: how to view total for expenses subaccount
> To: gnucash-user at gnucash.org
> Message-ID: <1225372005.6886.10.camel at Phil-Dell>
> Content-Type: text/plain
>
> On Thu, 2008-10-30 at 08:10 -0400, Donald Allen wrote:
>
> > On Thu, Oct 30, 2008 at 7:48 AM, Mike or Penny Novack
> > <stepbystepfarm at mtdata.com> wrote:
> > >
> > >>
> > > Fundamentals. Assets = Liabilities + Equity
> > > You can rearrange, so Assets - Liabilities = Equities and thus changes
> > > to (Assets - Liabilities) = changes to (Equity)
> > >
> > > You can think of Equity as "net worth".
> > >
> > > Accounts of type "Income" and "Expense" are temporary accounts used to
> > > categorize those changes to equity during an accounting interval. If
> the
> > > total of income is greater than the total of expenses, net worth is
> > > increasing, otherwise decreasing, the most famous literary definition
> > > being in "David Copperfield" by Dickens.
> >
> > Correct me if I'm wrong, but I believe this is not necessarily true.
> > For example, if income > expenses during an accounting period, but the
> > value of your assets decreases during that period by an amount greater
> > than income-expenses (as many of us have experienced during the recent
> > stock market turmoil), your net worth decreases, contrary to what you
> > said above.
>
> >From an *accounting* point of view, if your assets decrease, there must
> be a transaction representing this decrease, probably as an unrealized
> loss.  This is either a negative income (if you normally do your
> accounting to show an unrealized *gain*) or a positive expense.  Given
> the recent market turmoil, probably a large expense.  If your income is
> still > expense, and your assets have decreased, then your liabilities
> must have decreased more than your assets did, and your net worth has
> increased.
>
> I believe that in the past, assets were often shown at cost i.e. if you
> bought your house 50 years ago at $20,000, that's how you would show it
> on your balance sheet.  Doesn't match reality, but then you don't need
> extra transactions marking it to market value.  That's actually part of
> the problem Wall Street had.  They had these "assets", but as their
> perceived worth dropped, they needed to follow accounting rules and
> record huge losses.  Of course, if their perceived worth rises again
> (maybe because the mortgages aren't as risky as people fear), they can
> record huge incomes as well.
>
> I think part of the issue is that accounting uses the same words as
> normal English usage, but they don't quite mean the same (or normal
> English usage is a subset of accounting usage).  "Income" means salary,
> but can also mean other positive amounts (e.g. if a mutual fund
> automatically reinvests a dividend, that is income from an accounting
> point of view, but not necessarily "income" in normal usage).
>
> Phil
>
>
> ------------------------------
>
> Message: 2
> Date: Thu, 30 Oct 2008 01:01:47 -0700 (PDT)
> From: jgombos <nabble.forum.jog at spamgourmet.com>
> Subject: I want to track sales tax, but I also want the cost of an
>        item to include sales tax - how?
> To: gnucash-user at gnucash.org
> Message-ID: <20242357.post at talk.nabble.com>
> Content-Type: text/plain; charset=us-ascii
>
>
> I'm interested in knowing how much VAT I pay, so I created Expense:Tax:VAT,
> and every transaction becomes a split transaction.  When I look at other
> expense categories, like Expenses:Food for example I see amounts less the
> tax.
>
> Suppose I want to know the total food expenses including VAT.  I can't
> simply add the food balance to the VAT balance, because other purchases
> cause VAT expenses as well.  How can I accomplish this, without creating a
> separate VAT subaccount for every expense account?
>
> I'm already expecting my expense accounts to turn into a colossal heap
> because I will need to create a USD and EUR subaccount for every account as
> it is.  Add a VAT account to every leaf node in that tree and we're talking
> hundreds of accounts just to track sales tax.
> --
> View this message in context:
> http://www.nabble.com/I-want-to-track-sales-tax%2C-but-I-also-want-the-cost-of-an-item-to-include-sales-tax---how--tp20242357p20242357.html
> Sent from the GnuCash - User mailing list archive at Nabble.com.
>
>
>
> ------------------------------
>
> Message: 3
> Date: Thu, 30 Oct 2008 10:34:10 -0400
> From: "Donald Allen" <donaldcallen at gmail.com>
> Subject: Re: how to view total for expenses subaccount
> To: stepbystepfarm at mtdata.com
> Cc: gnucash-user at gnucash.org
> Message-ID:
>        <d484362e0810300734o1a73ecfbx2bf54fd00cd50ec9 at mail.gmail.com>
> Content-Type: text/plain; charset=ISO-8859-1
>
> On Thu, Oct 30, 2008 at 9:13 AM, Donald Allen <donaldcallen at gmail.com>
> wrote:
> > On Thu, Oct 30, 2008 at 9:01 AM, Mike or Penny Novack
> > <stepbystepfarm at mtdata.com> wrote:
> >>
> >>> Correct me if I'm wrong, but I believe this is not necessarily true.
> >>> For example, if income > expenses during an accounting period, but the
> >>> value of your assets decreases during that period by an amount greater
> >>> than income-expenses (as many of us have experienced during the recent
> >>> stock market turmoil), your net worth decreases, contrary to what you
> >>> said above.
> >>>
> >>
> >>  No --- if income > expenses for a period then the net worth is
> increasing.
> >> But you have to do your books entirely "cash" or entirely "accrual",
> can't
> >> mix the two together. We'll use your examples.
> >>
> >> At start of period
> >>  Assets     = 30,000
> >>  Liabilities = 25,000
> >>   (net worth is 5000)
> >> At end of period
> >>  Assets    = 15,000
> >>  Liabilities = 5,000
> >>    (net worth is 10,000)
> >> Income for the period was 5000 > than expenses. Net worth has increased
> by
> >> 5000 even though the amount of assets has decreased, the amount of
> >> liabilities decreased by a larger amount.
> >>
> >> The stock market turmoil example to which you refer is the confusion
> that
> >> results when you try to combine "cash" and "accrual" accounting in the
> same
> >> set of books. You can't do that. If you are strictly on the cash basis
> then
> >> those stocks haven't changed their asset value (yet). If you are on the
> >> accrual basis and so taking into account their decrease in market value
> then
> >> you also have the expense "unrealized losses in investments".
> >>
> >> You might find it useful, perhaps necessary, to maintain two sets of
> books,
> >> one on the "cash basis" and one on the "accrual basis". Possibly even
> more
> >> sets of book., For example one on a "personal basis" (sorry, but for tax
> >> purposes, the "expense" of the food you eat is not an expense for tax
> >> purposes). One instance of the application GnuCash can be used for all
> of
> >> the sets of books, those are simply separate files perhaps even kept in
> >> separate directories (file folders). What books you keep depends upon
> your
> >> needs for information, financial planning, tax reporting, etc.
> >
> > I understand -- thanks. This is why I'm not an accountant.
>
> In my own (feeble) defense, I will note that in Gnucash, when you
> update stock prices, your net worth changes accordingly, without any
> change in income-expense (this is what prompted my comment). But I
> understand that Gnucash (or the way I'm using it) is doing neither
> strict cash nor accrual accounting, thus Mike's (and Phil's) point.
>
> /Don
>
> >
> > /Don
> >
> >>
> >
>
>
> ------------------------------
>
> Message: 4
> Date: Thu, 30 Oct 2008 11:10:20 -0400
> From: Derek Atkins <warlord at MIT.EDU>
> Subject: Re: I want to track sales tax, but I also want the cost of an
>        item to include sales tax - how?
> To: jgombos <nabble.forum.jog at spamgourmet.com>
> Cc: gnucash-user at gnucash.org
> Message-ID: <sjmskqet8yr.fsf at pgpdev.ihtfp.org>
> Content-Type: text/plain; charset=us-ascii
>
> Hi,
>
> jgombos <nabble.forum.jog at spamgourmet.com> writes:
>
> > I'm interested in knowing how much VAT I pay, so I created
> Expense:Tax:VAT,
> > and every transaction becomes a split transaction.  When I look at other
> > expense categories, like Expenses:Food for example I see amounts less the
> > tax.
> >
> > Suppose I want to know the total food expenses including VAT.  I can't
> > simply add the food balance to the VAT balance, because other purchases
> > cause VAT expenses as well.  How can I accomplish this, without creating
> a
> > separate VAT subaccount for every expense account?
> >
> > I'm already expecting my expense accounts to turn into a colossal heap
> > because I will need to create a USD and EUR subaccount for every account
> as
> > it is.  Add a VAT account to every leaf node in that tree and we're
> talking
> > hundreds of accounts just to track sales tax.
>
> Yep.  Sorry.  You just can't do what you want easily with the basic
> tools of double-entry accounting.
>
> You could do a query based on one of the accounts being the
> Expenses:Groceries and then get a report to build the sum of the
> expenditures.  I don't know if any of the existing reports would do
> this for you...  MAYBE a "Register Report" off the query results?
>
> > Please remember to CC this list on all your replies.
> > You can do this by using Reply-To-List or Reply-All.
>
> -derek
>
> --
>       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>       Member, MIT Student Information Processing Board  (SIPB)
>       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>       warlord at MIT.EDU                        PGP key available
>
>
> ------------------------------
>
> Message: 5
> Date: Thu, 30 Oct 2008 11:29:14 -0400
> From: Derek Atkins <warlord at MIT.EDU>
> Subject: Re: how to view total for expenses subaccount
> To: "Donald Allen" <donaldcallen at gmail.com>
> Cc: gnucash-user at gnucash.org
> Message-ID: <sjmod12t839.fsf at pgpdev.ihtfp.org>
> Content-Type: text/plain; charset=us-ascii
>
> "Donald Allen" <donaldcallen at gmail.com> writes:
>
> > In my own (feeble) defense, I will note that in Gnucash, when you
> > update stock prices, your net worth changes accordingly, without any
> > change in income-expense (this is what prompted my comment). But I
> > understand that Gnucash (or the way I'm using it) is doing neither
> > strict cash nor accrual accounting, thus Mike's (and Phil's) point.
>
> Correct.
>
> GnuCash keeps track of the AMOUNT of your holdings, not the VALUE of
> those holdings.  I.e. it knows you have N shares of stock S, and knows
> you bought those N shares at $X each.  The amount and value in the
> account itself is computed from the transactions, but the CURRENT
> value is computed in the reports from the PriceDB entry.
>
> So yes, UNREALIZED gains do not need transactions tied to them.
> Only when you realize a gain/loss do you need a transaction.
>
> > Please remember to CC this list on all your replies.
> > You can do this by using Reply-To-List or Reply-All.
>
> -derek
>
> --
>       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>       Member, MIT Student Information Processing Board  (SIPB)
>       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>       warlord at MIT.EDU                        PGP key available
>
>
> ------------------------------
>
> Message: 6
> Date: Thu, 30 Oct 2008 11:29:32 -0400
> From: Eric Morey <eric at glodime.com>
> Subject: Re: help: tax prepration software
> To: gnucash-user at gnucash.org
> Message-ID: <1225380572.5856.78.camel at glodime-XI>
> Content-Type: text/plain; charset="us-ascii"
>
> On Thu, 2008-10-30 at 09:06 +0100, Marcus Wolschon wrote:
> > First question:
> >
> > What country are you in?
>
> If I had to guess, I'd say USA.
>
>
> > This affects a great deal regarding taxes.
> >
> Indeed. This cannot be understated.
>
>
> Due to the following terminology used in the original post, I'd bet an
> awful lot that Benjanin's company is incorporated in the USA.
>
> > 2008/10/30 Benjamin Smith <bjnsmith at gmail.com>:
> > >  small business - an s-corp...
>
> > > file my returns this year...
>
> > > I really don't like intuit products...
>
> > > taxcut.. I have never used it.
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