Garage Sale

[Aryeh Leib Taurog]

Phil Frost wrote:
> On Tue, Feb 01, 2011 at 11:42:29PM +0200, Aryeh Leib Taurog wrote:
>> Say I dig up and sell some old camping gear that I haven't used for  
>> years.  It seems to me I could just use a generic income account for  
>> occasional sales:
>>
>> Debit Assets:Cash 20
>> 	Credit Income:Other 20
>>
>> Or use the expense categories I already set up.  I think of this as  
>> treating the expense account as a sort of inventory account as well:
>>
>> Debit Assets:Cash 20
>> 	Credit Expense:Camping Gear 20
> 
> A search for "cost of goods sold" will give you some insight into how
> businesses deal with this problem. However, they purchase goods with the
> intent to resell (or use them to manufacture, then sell) them, and take
> care to accurately record the cost of their inventory. Probably neither
> is true for a garage sale.
> 
> You could record income as a negative expense, after all, they are each
> change in equity in the current accounting period (search "accounting
> equation" for more information). However, to do so would defeat the
> purpose of recording them separately in the first place. Is making
> $500/wk and spending $450 of it the same as making $50/wk? If you spend
> all of your paychecks do you not have to pay income tax?

Yes I see your point.  And I guess I *am* obligated to pay taxes on 
that $20 I made from the garage sale.  (Or am I?  After all, I 
probably paid over $150 in an earlier tax period for that old stuff, 
so I'm selling it at a significant loss just to be rid of it.)