[GNC] Summarizing cash flow report w.r.t. entries and exits (discounts)

[Christian Kluge]

Hi,

under certain circumstances VAT can be treated as expense/income,
e. g. in Germany when one’s only required to do cash based accounting.

In that case payable output tax and refunds would be treated as income
and input tax and vat payments are treated as expense.

Kind regards

Christian Kluge

Am 09.08.2018 um 17:57 schrieb Adrien Monteleone:
> By all means, talk to a local CPA, but usually a pass through is treated as a liability.
> 
> So you’d have this account:
> 
> Liabilities:VAT payable
> 
> The invoice transaction would look like this:
> 
> Dr. Cash/Checking/etc.
> Cr. Income
> Cr. Liabilities:VAT payable
> 
> The debit would be for the full amount received.
> 
> The credit to income is just for your services/products.
> 
> The VAT is strictly a liability. Those funds don’t belong to you and you didn’t earn them so they are not income.
> 
> If you pay estimated VAT in advance and then get refunds, that should simply reduce your actual liability. So when paying the estimated amount, you’d enter a debit to that Liability account, and then each invoice will reduce that pre-payment as they are posted. If you receive a refund for excess pre-payment you’d enter something like this:
> 
> Dr. Cash/Checking/etc.
> Cr. Liabilities:VAT payable
> 
> Income shouldn’t enter the picture here. Had you estimated exactly, there would have been no refund.
> 
> If you receive ‘vendor compensation’ for collecting and remitting the tax for the state, that is probably income, but get a professional opinion. (Usually a small percentage of the tax due and subtracted when filing.) It’s usually not actually paid-back to you, you just get to keep it, though your jurisdiction may do otherwise.
> 
> Regards,
> Adrien
> 
> 
>> On Aug 9, 2018, at 8:54 AM, brainwash <ligius+gnucash at gmail.com> wrote:
>>
>> I don't know how it should be set up as I'm using this only for personal
>> bookkeeping.
>> To answer the question: the VAT is a liability(?) in that I receive it from
>> the customers and have to give it back to the state.
>> There's is also some VAT on expenses but it would be too tedious too track
>> that for each small purchase.
>>
>> With regard to that, the VAT is self-reported and predicted, so I sometimes
>> end up receiving discounts (kickbacks?) from the state. This shows up as
>> income under the "Cash flow", but I guess in that case it makes sense.
>>
>> Regards
>>
>>
>>
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