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

[Adrien Monteleone]

Which is why everyone should speak to a local CPA for official guidance.

Regards,
Adrien

> On Aug 9, 2018, at 2:25 PM, Christian Kluge <frakturfreak at gmail.com> wrote:
> 
> 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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