Accounts Receivable Question

Derek Atkins warlord at MIT.EDU
Wed Nov 11 01:52:18 EST 2009


"Maf. King" <maf at> writes:

> On Monday 09 November 2009 00:59:27 Stephski wrote:
>> I have searched the existing posts extensively, but can't find quite the
>> same problem.
>> I am a new user and I am inheriting an established account that I am not
>> certain was set up correctly, or I'm just an idiot.
>> Due to the complexity of our billing, we generate invoices outside of
>> GnuCash.  When I attempt to enter a new invoice as a "Receivable" against a
>> specific subaccount for which the work was done, another entry for the
>> exact same amount shows up as a "payment" within the subaccount.
>> Here is the process I am using:
>> I go to the subaccount set-up under "Assets:Receivables:Company Name" (this
>> subaccount represents a company for which we perform labor during the
>> month).
>> I open that subaccount and enter the invoice details, choosing the transfer
>> account of "Assets:Receivables:Company Name."
>> That entry shows and and automatic one appears as a payment for the same
>> amount in the same subaccount.
>> In the past, they got around this problem by entering invoices into
>> "Income" accounts, and when the payments went in, they were posted against
>> the "Assets:Receivables" accounts.  From an accounting perspective though,
>> that seems bass ackwards.
>> Am I incorrect in my thinking and the old way was really the right way (if
>> so, it makes it tough at year end for cash accounting where we need to
>> ignore receivables)?
> Hi Stephski.
> It sounds to me that you are doing it wrong, and the "old way" is more 
> correct.

Maf is correct, you're doing it wrong.  In particular you are telling
GnuCash that the Debit and Credit are both the same account.  You should
use the Income account like you were doing before.

> _but_
> AFAIK, a business which does cash accounting, by definition, doesn't have 
> receivables / payables (although IANAA.) 
> I understand that you want to track "receivables" though - cash flow forecasts 
> etc. At year end, could you just report on the Income tree, and then subtract 
> the balance of A/R?  That would give you the total actual cash received for 
> the year... I think.

Really this is just a reporting issue.  When the period switches over
you just need to substract out the outstanding Receivables from your
Income (and remember that as your 'starting' value for the next period.
You can still keep track of it all on an "accrual" basis.

> HTH,
> Maf.

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       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL:    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available

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