Reports, (the heart of darkness)

[John Whitmore]

On Wed, Dec 07, 2016 at 05:52:31PM -0500, R. Victor Klassen wrote:
> It’s all very nice to say you want to keep your books on the same basis.  But if you have reason to file on a cash basis, and you’re using GnuCash, you have no choice but to fix up any transactions that cross the year end.
> 
> GnuCash doesn’t offer cash-based accounting.  

Oh no! I'll have to do this manually! I'll read on.

> 
> What I’ve generally done - (in our business, in this jurisdiction we are allowed to use cash basis and it provides certain tax advantages) - is watch for transactions likely to cross the year end boundary and then changed their posted date.  This works if there are few enough of them (and happily they generally can be counted (without resorting to binary) on the fingers of one hand).  Possibly a cleaner approach would be to put a pair of cancelling transactions on the last day of the fiscal year and the first day of the next corresponding to each transaction that spans the year end.  One to reverse the effect of the transaction that was posted before the year end, and one to put it back in.  In that way accounts payable, receivable etc.  remain unaffected, but the total income from each of the years corresponds to cash basis accounting.
> 
> On the general question of reports to run, I typically run a full transaction report, and pour that into a spreadsheet.  This lets me proof-read it to ensure that all the transactions really did get allocated to the right categories, and it allows be to compute sums of categories that all appear in a single place on a tax statement even if my chart of accounts doesn’t correspond directly to the tax forms.
> 

Thanks for all that. I think that it makes sense. I'll try and run through it
and see how I get on. It's a pity that GnuCash don't do Cash based
accounting. Maybe if I get a chance I might look into that. For now I have
reports to put together. Thanks for your advice on that.


> > On Dec 7, 2016, at 5:30 PM, Mike or Penny Novack <mpnovack at mtdata.com> wrote:
> > 
> > On 12/7/2016 4:51 PM, John Whitmore wrote:
> >> OK Now I think I have a sensible question. I'm looking at the "Income Statement" report which looked good, but I've found a problem. Once I file an Invoice in GnuCash it shows up as "Income" I'd have said that it's only "Income" when the invoice is actually paid. That's distorting my income as it looks like I've got money I don't actually have as yet. Is this the way it would be expected to work? I'm not an accountant so I could have the wrong impression of things.
> > 
> > This is the fundamental difference between "cash basis" and "accrual basis"
> > 
> > On which basis are you filing taxes? Many businesses are required to use accrual. Many individuals normally use cash (and some businesses). What are the rules of YOUR jurisdiction? How have you been filing? There may be additional complications if switching from one to the other. You almost certainly want to be keeping your books on the same basis as you file. Otherwise going to be complex adjustment entries at the end of the period, which if as you say, not experienced in accounting, you don;t want to have to tackle.
> > 
> > Michael D Novack
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