Split transaction and VAT

[John Whitmore]

On Thu, Oct 22, 2015 at 09:54:26AM +0100, Maf. King wrote:
> On Thu 22 October 15 09:09:20 John Whitmore wrote:
> > On Thu, Oct 22, 2015 at 08:23:14AM +0100, Maf. King wrote:
> > > On Wed 21 October 15 23:09:46 John Whitmore wrote:
> > > > I'll start by saying that I'm easily confused by how finnance is delt
> > > > with
> > > > so don't take it badly that I'm struggling with the GnuCash Tutorial
> > > > document.
> > > > 
> > > > I've been practicing with GnuCash on my personal finances all year as a
> > > > prelude to running my own small company. Now I'm at the point where I'm
> > > > trying to add my first transaction to my company acconts. Now I have to
> > > > use
> > > > splits!
> > > > 
> > > > Say I've been paid 1,230 of which 230 is VAT (Value Added Tax) which at
> > > > some point has to be paid to the government. All this is coming from
> > > > Company_A.> 
> > > Hi John,
> > > 
> > > > I have an Income account for Company_A So I go to that account and start
> > > > a
> > > > new transaction by filling in a summary and clicking the "split
> > > > transaction" as suggested in the tutorial. So now I add one split of
> > > > 1,000
> > > > into
> > > > Assets:CurrentAccount and 230 into Liabilities:VAT hit return and
> > > > everything disappears no transaction is recorded in the
> > > > Income:Company_A Account.> 
> > > Just before you hit enter to record the transaction, does the split show 2
> > > or 3 lines?  You should have a line for Income, A line for Bank, and a
> > > line for Output VAT (that's what it is called in the UK)
> > > 
> > > If you are in the income account, the splits should be
> > > Bank:    1230         ---
> > > Income        ---           1000
> > > OutputVAT	   ---                230
> > > 
> > > 
> > > As an aside, is CompanyA representing your company or a customer of your
> > > company?
> > 
> > Thanks a million Maf,
> > 
> > I think I got it I was treating a split transaction as 2 "normal"
> > transactions, so I had one split row for the 1000 and one split row for the
> > vat. I actually needed a third row to tell GnuCash that the total was 1230
> > and was coming out of Company_A account.
> 
> Hi John,
> 
> Glad that clarified things for you.  But.... read on....
> 
> > 
> > In what I'm callin a "Normal" transaction you'd never mention the Company_A
> > in a transaction. So I'd just add a transaction of 1230 into my current
> > account. As the transaction was added into the Account the other part of
> > the transaction is assumed to be this account.
> > 
> > I guess it's all this double book stuff. At every point in the system the
> > equation balances.
> > 
> 
> Not certain you have this quite right yet. 
> 
> What you refer to as a "normal" transaction actually has 2 splits - one to 
> each of the accounts affected by the double-entry transaction.  If there was 
> no VAT involved, your transaction would be between income and bank, and the 
> internal data in GC would be a split transaction to increase the balance of 
> both of those accounts.
> 
>  I presume that when company A pays you, your bank balance goes up by 1230.  
> (if not, then you are way off the mark!)
> 
> Because of the VAT, only some of that money is actual income, the rest (23%?) 
> is effectively "borrowed" from the government.  So there is an increase of 
> only 1000 booked to the income account.  The bank has to show an increase of 
> 1230; the balance being made up by an increase of the VAT that you owe...
> 
> 
> > I do work for Company_A so I think they're a customer.
> > 
> 
> OK, this is a point about set up, I know you said you were fooling around 
> learning but IMHO it would be more usual to break up income by category, eg 
> sales, consulting, rental, than by customer.
> 
> GC has the concept of customers and invoices to help you see who owes what 
> etc.
>

Hi Maf,

thanks a million for all your help. I think I have it now. I'm going to play
with it and get used to how it all works but for now all my accounts seem to
reflect what I'd expect, or what I've learned to expect as I get used to book
keeping.

John