Understanding taxes and the income statement

[doncram]

Right, i must have  misspoken.  Set Tax included to Yes so that it
understands tax is included in the $20. Thanks for noting that.  Pete
replied by separate email that he will try all this later, after a few days
busy with something else.  --Doncram

On Tue, May 23, 2017 at 5:36 PM, Adrien Monteleone <
adrien.monteleone at gmail.com> wrote:

>
> > On May 23, 2017, at 10:42 AM, Derek Atkins <warlord at mit.edu> wrote:
> >
> > 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.
>
> That’s the behavior I’m getting too in test invoices, which is why I noted
> to set to “yes” in my previous reply. Not sure how doncram’s getting the
> opposite effect.
>
> >
> >> 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.
> >
> >> Please remember to CC this list on all your replies.
> >> You can do this by using Reply-To-List or Reply-All.
> >
> > -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
> >       warlord at MIT.EDU                        PGP key available
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