Understanding taxes and the income statement

[doncram]

Just to confirm clearly to Pete.  What i did, which was to "edit the
invoice to show 20.00 for Consulting revenue with Taxable set and with Tax
included set to NO, and set Tax table = Consulting Sales Tax", and then
post it, created net income of 18.69 (which I could see in the Income
Statement)  and Sales Tax liability/payable of 1.31, and it created Account
Receivable of $20.00.   Then I further recorded receipt of $20 cash against
the invoice.  And then the Balance Sheet showed the $20 cash and the $1.31
of Sales Tax liability/payable.  Like you have been saying, the 1.31 should
not add to net income.  And like the others are saying, GnuCash can handle
it correctly.  So you must not be implementing it correctly.

Pete, I think you should try again and set up a new invoice and then post
it, and then look at the income statement and the balance sheet.  If that
still doesn't work, then to figure out what is going wrong for you, I
wouldn't mind corresponding separately or talking you through the sequence
of transactions on the telephone while we are both at GnuCash on our
computers, if you are in the U.S. and if you email me your phone number
privately (don't email it to the gnucash-user list).  Or you could phone
me, if we set it up in private email.

Don

On Mon, May 22, 2017 at 4:11 AM, Maf. King <maf at chilwell.net> wrote:

> On Monday, 22 May 2017 01:11:31 BST P M wrote:
> > Thank you.  I think I am doing what you have done.  My problem is
> > understanding why the 1.31 adds to Net Income instead of takes away from
> it
> > when you create an income statement.  It seems like sales tax would take
> > away from net income, no?  Is that what yours does?
> >
> >
>
> Hi Pete,
>
> Your net income is £18.69.  If you've got the sales tax account set up
> properly and are using a tax table as outlined in the docs, you shouldn't
> see
> 1.31 on an income report - because it is neither income nor expense, it is
> a
> liability.
>
> Maf.
>
>
>