invoices, A/R and balance sheet

[John Layman]

Sorry about the formatting problem.

============================================================================
============
accrual basis income plus beginning A/R balance minus ending A/R balance
results in the cash basis income figure
============================================================================
============
accrual basis expense plus beginning A/P balance minus ending A/P balance
results in the cash basis expense figure
============================================================================
============

Also, just to be clear, in accrual basis accounting, the income is realized
when invoiced.  (Obviously, that also necessitates special handling of bad
debts -- another topic.)

-----Original Message-----
From: gnucash-user-bounces at gnucash.org
[mailto:gnucash-user-bounces at gnucash.org] On Behalf Of John Layman
Sent: Thursday, February 24, 2011 4:50 PM
To: 'Luis Watts'; gnucash-user at gnucash.org
Subject: RE: invoices, A/R and balance sheet

You are thinking in terms of cash basis rather than accrual basis, the
latter being what GnuCash does.

If you report for taxes on a cash basis, you will have to do a conversion.
I use a simple spreadsheet to convert from accrual basis to cash basis:

accrual basis income plus beginning A/R balance minus ending A/R balance
results in the cash basis income figure accrual basis expense plus beginning
A/P balance minus ending A/P balance results in the cash basis expense
figure

Credit card purchases are problematic if expenses are dated when incurred
rather than when the credit card account is paid, but it is my understanding
that it is acceptable to the US IRS to report credit card transactions on
the date they occurred.  Nota bene: I am not an accountant, so none of this
is authoritatively said!

-----Original Message-----
From: gnucash-user-bounces at gnucash.org
[mailto:gnucash-user-bounces at gnucash.org] On Behalf Of Luis Watts
Sent: Thursday, February 24, 2011 6:38 AM
To: gnucash-user at gnucash.org
Subject: invoices, A/R and balance sheet

Perhaps this is an accounting issue but I am confused. I issued a number of
invoices last year. I have been processing the payments as they come in
against the A/R for the invoice with a deposit to checking. I closed the
year on 12/31/2010. Additional payments have been processed this year
against those invoices but although the deposit dates in the transaction
register are correct for this year the balance sheet is showing the income
as accruing last year on the original post date of invoice. I would expect
it to be showing up as current year income. Am I doing something wrong?

 

Thank you.

_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.

_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.