Tracking Money in Savings Account

[Ian Waddington]

On 17 Dec 2010, at 16:39, Mike or Penny Novack
<stepbystepfarm at mtdata.com> wrote:

>
>> Case 2: you must pay the income tax in 6 month time.
>> Instead of writing a check right away, you decide to
>> get some interest for the money instead and keep it
>> on your savings account. However, you know you have
>> to pay $tax in 6 months time, so you transfer the money to
>> your "income tax" envelope. This way, while your bank statement
>> still shows the full amount, your GC bank account only shows the
>> amount of money you really have.
>>
>> (Another way to handle case 2 - and probably more correct in
>> pure bookkeeping terms - would be to make a transfer from
>> Expenses:Income Tax to Liabilities:Income Tax and in 6 months
>> time, write a check for the tax office and book it as a transfer from
>> your normal Savings account to Liabilites:Income Tax).
>>
> I think that's the issue here. That people don't understand why the normal bookkeeping method is the second.
>
> In the interim you have the cash (in your checking account) and a liability for taxes to be paid by some future date. Will you pay them by check (the reason why you seem to think "less money in the checking account than the bank thinks" or some other way. For example, suppose you have "pre tax money available" but can't touch any of that without paying a penalty tax till you reach a certain age. So maybe you don't (in effect) take the money directly from your checking account but by a short term loan (trading liability for liability) that you pay off when that critical date has passed.
>
> Bookkeeping is about ACTUAL transactions, not transactions that might or might not occur. For projected transactions (planning) we use a "budget".
>

So this raises an interesting question, do users and the developers
see gnucash as bookkeeping tool or a personal finance manager?

I'd be interested in peoples views

Ian




> Michael
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