"correcting" transactions

John Sowden jsowden at americansentry.net
Fri Feb 21 05:00:23 EST 2014


On 02/21/2014 01:36 AM, Geert Janssens wrote:
> On Thursday 20 February 2014 19:25:01 John R. Sowden wrote:
>> I have been reading a lot recently about correcting, removing, etc.
>> transactions.  This is typically a no no in accounting.  I am not a
>> CPA, but I have a general idea of GAAP (generally accepted accounting
>> practices).  It does not allow for removing or editing existing
>> transactions without an audit trial.  A simple was to do these things
>> is to create "reversing entries" as general journal entries with
>> explanations.  If the business owner is the only person using gc, and
>> the resulting reports is only for his/her use, this is more of a
>> formality, but if a bookkeeper/embezzler is using gc, this allows
>> transactions to be hidden/altered.  Not a good thing.
>>
>> John
> John,
>
> It's probably useful to keep in context: GnuCash has two target
> audiences - home users trying to keep track of their home budgets and
> small businesses.
>
> I don't think a home user will gain much by applying GAAP practises.
> These users don't need an audit trail, they just want to track where the
> money comes from and goes to. This target group benefits from getting a
> transaction history that matches reality as closely as possible.
> Enforcing reversing transactions and other GAAP principles here would
> only make it harder to track history because you mentally have to map
> the corrections to the mistakes to see the actual history.
>
> For the second target group GAAP can be a useful/required tool depending
> on context and timing. GnuCash does have some useful commands for this
> (like reversing transactions) but doesn't enforce them.
>
> And that last part is where John Ralls alluded that gnucash is not for
> businesses that require formal audit trails. He said so in his typical
> terse style but I didn't read any personal attack into it.
>
> Geert
>
>

Thank you for taking my technical response and turning it into a more 
universal response. Almost verbatim, your text should be put into the 
documentation in the "introduction" section.

John



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