Invoice & Bill Posting Date Issues Across Multiple Periods

[Adrien Monteleone]

Thanks Dale,

That’s a very good down-to-earth point.

While I understand not getting lost in the fog of battle of "accuracy for accuracy’s sake” I also don’t like ending up in situations where I have to revisit or lookup historical information and have to remember “oh yeah, this or that figure isn’t right because of some bug, glitch, or workaround.”

Also, for budgeting considerations, I want to avoid unnecessary fluctuations for income and expenses particularly. Trying to match up my billable hours vs. my expenses can be a mess if everything doesn’t fall where it is supposed to. That’s a clear case of needing this for financial decisions. I need to continually keep an eye on whether or not my billing rates are sufficient to cover those expenses, or the expenses are exceeding what should be a reasonable level to earn a particular amount of revenue.

Certainly, if this were being done on paper and computers were not available, I’d have to make many a correcting entry. But we do have computers and I’m entering in all the relevant data. I just noticed that it isn’t all being used, the result of which requires correcting entries that wouldn’t otherwise need correcting. My view is that a correcting entry should only be needed because I didn’t have the relevant information the first time, not because of some limitation of the entry or recording system. Accrual entries are different and can’t be avoided, in fact, should be embraced and are necessary with accrual based accounting. But if at all possible, they should also be automatic if all the relevant info has already been provided.

So as I noted in another reply just now, my approach at least for the pre-paid expense issue will be to use my OS calendar reminders and post the transactions manually outside of the business features. This has a cost of not getting this ‘due’ reminder in the same context as the others (in GnuCash) and the transactions not being visible on a vendor report, or even discoverable with the business features at all, but my accounts will not contain errors or require corrections. My balance sheets will not have inflated AP or Asset levels.

For the question of ‘job-based’ invoicing, I’ll have to employ the use of a ‘un-billed work’ revenue account.

For the question of multi-period bills, I’m not sure yet. I guess I’ll have to make accrual entries on a case-by-case basis and see how it goes.

Regards,
Adrien

> On Dec 15, 2017, at 12:45 PM, Dale Alspach <alspachde at gmail.com> wrote:
> 
> Adrien,
> I suggest that you may need to shift your point of view in order to resolve
> this.
> Disclaimer: I am not an accountant.,
> 
> My experience has been that you should not lose sight of the primary
> purpose of an accounting system: It is there to provide the information you
> need to make financial decisions. GAAP, satisfying taxing authorities,
> surviving audits, etc. are secondary.
> 
> Why do you want this prepaid expense to show in your reports? Is it a net
> worth issue? An underlying cash flow issue? Something else?
> 
> When is it important that it show in your balance sheet or other report?
> When is it important to show the obligation to pay the bill when it arrives?
> 
> The answers to these questions should help you determine what you really
> need. Then look for an implementation that satisfies these primary
> conditions and does not cause secondary problems.
> 
> Dale
> 
> On Dec 15, 2017 11:23 AM, "John Ralls" <jralls at ceridwen.us> wrote:
> 
>> 
>> 
>>> On Dec 15, 2017, at 7:51 AM, Derek Atkins <warlord at mit.edu> wrote:
>>> 
>>> Adrien,
>>> 
>>> Adrien Monteleone <adrien.monteleone at gmail.com> writes:
>>> 
>>>> Sorry, allow me to rephrase, when do I acquire the pre-paid expense
>> ASSET?
>>> 
>>> Can you please explain what you mean by a "pre-paid expense asset"?  Is
>>> it an Expense?  Or is it an Asset?
>>> 
>>> Could you give a concrete example of something that is a "pre-paid
>>> expense asset"?
>>> 
>>> Sorry for being dense, but I still don't grok what you're trying to do
>>> or how this is mapping into a real-world transaction.
>> 
>> Suppose you have an insurance policy that lets you either pay monthly or
>> for a whole year, with the latter getting a 10% discount, and that even if
>> you pay for the whole year you can cancel and get a pro-rata refund. The
>> annual pre-payment is booked as an asset called "pre-paid expense". Each
>> month you credit 1/12 of the annual payment to expenses:insurance. If 3
>> months in you cancel the policy, the refund creates a transfer transaction
>> back to the bank account.
>> 
>> Regards,
>> John Ralls
>> 
>> _______________________________________________
>> gnucash-user mailing list
>> gnucash-user at gnucash.org
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>> 
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.