Reports, (the heart of darkness)

[John Whitmore]

On Wed, Dec 07, 2016 at 05:09:19PM -0500, Aaron Laws wrote:
> 
> It looks like you have stumbled upon the difference between accrual basis
> and cash basis accounting. Generally accepted accounting principles dictate
> the use of the former: When you *earn* revenue, it should be reflected in
> your books, not when you get the money (see
> https://en.wikipedia.org/wiki/Revenue_recognition). The United Statesian
> Internal Revenue Service allows me to use either when doing business taxes,
> though, understandably, they're picky about changing between the two
> systems.
> 
> This is usually done by crediting an "accounts receivable" account to
> represent that someone owes you money:
> 
> dr: assets:AR:consulting          $250
> cr:           revenue:consulting            $250
> 
> When you actually get the money, record it as such:
> 
> dr: assets:chequing          $250
> cr:            assets:AR:consulting       $250
> 
> You should speak to your accountant or tax adviser about whether to use
> cash or accrual basis accounting and which might be best for you from a tax
> perspctive.
> 
> I'm not an accountant.

This thred has thrown up two methods of doing Cash based accounting. Aaron's
method is outlined above, and I'm not quite sure I fully understand it, and
the other method was NOT to use GnuCash for invoicing but to use an external
spread sheet or something. Then you just record the payments in GnuCash.

I wonder could you expand on the above method:

> This is usually done by crediting an "accounts receivable" account to
> represent that someone owes you money:
> 
> dr: assets:AR:consulting          $250
> cr:           revenue:consulting            $250
> 
> When you actually get the money, record it as such:
> 
> dr: assets:chequing          $250
> cr:            assets:AR:consulting       $250
> 

At present I create an invoice for consultancy work:

Income Account = Income:Consultancy
Subtotal       = 3,500.00
Tax            = 805.00

Once posted that shows up in:

Assets:Accounts Receivable as 4,305.00
Income:Consultancy as 3,500.00
Liabilities:Vat as 805.00

So in the method above I'd create a manual transaction in Revenue:Consulting
of 3,500.00. Not sure where Revenue:Consulting would be? What's the top
level?

Actually I'm starting to think I should not post an invoice anywhere near the
deadline for End Of Year.