How to book incomes from a past accounting period?

Mike or Penny Novack stepbystepfarm at mtdata.com
Thu Oct 17 06:48:00 EDT 2013


How you handle this depends on whether your association's books are kept 
on  "cash" or "accrual" basis.

Not a gnucash question (doesn't depend on what program you use for the 
books or even old fashioned pen and ink on paper)

If accrual basis --- you already booked this income in the last period 
as a receivable. This payment is just clearing that overdue receivable.
If cash --- it is income received THIS period regardless of the fact it 
was due in the last. You might consider an income account for 
"membership fees due in previous year". Not at all an unusual situation. 
For example, one of the organizations receives reimbursements for 
certain expenses from a grant. The qualifying expense (and sending that 
in for reimbursement) might have occurred near the end of one period and 
the reimbursement received in the next. Treating the amount as an asset 
(liability of the grant giving organization) not really appropriate as 
it is up to them whether they choose to reimburse an expense or even 
possibly go over the promised total amount (so I'd always be submitting 
MORE than the total promised amount and in any case very unlikely for 
qualifying expense receipts to come out exactly to the total). 
Similarly, while you are allowed to treat PLEDGES of donations as 
legally binding I know of no membership organization where belonging in 
the past is a guarantee that membership won't be dropped at any time 
without notice.

Michael D Novack.

PS: I know of many organizations that treat memberships as a receivable 
just so they can use the invoicing system to bill members. But like I 
said, unlike pledges there generally isn't any legal obligation to 
continue to be a member of an organization.

>
>a new season just started for an association I'm part of. I created a new
>Gnucash file for the new season's finances.
>
>Now I occasionally receive money that "belongs" to the past season. For
>example, somebody who forgot to pay their membership fees last year pays
>the double amount this year. What is the best way to handle this?
>
>What I tried:
>
>* Equity:Past season
>  - Overdue membership fee for John Smith: $20 (to Income:Membership fees)
>
>* Income:Membership fees
>  - Overdue membership fee for John Smith: $-20 (from Equity:Past season)
>  - Membership fee John Smith (past season): $20
>  - Membership fee John Smith (current season) $20
>
>This seems to work, as it leaves me with the correct total of $20 in
>Income:Membership fees and somehow documents past year's money.
>
>I think the question is more general than that, though: How to handle
>transitions between accounting periods? Should I book incomes from past
>years under incomes? Or are they equity? A/R? Or something else?
>
>Thanks for your help?
>Jonas
>  
>



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