Understanding taxes and the income statement

[Derek Atkins]

Hi,

doncram <doncram at gmail.com> writes:

> 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

Are you sure you set Tax Included to "NO"?  With that setting gnucash
should add the tax on top, which means at 7% on $20.00 you would get
Income:Sales of $20.00 and Tax Withheld of $1.40, for a total in A/R of
$21.40.

With Tax Included set to YES then it tells gnucash that the taxes are
included in the $20 value so you'd get your $18.69 Income:Sales and
$1.31 Tax Withheld, with $20 in A/R.

> 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.

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-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
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