[GNC] How to Reclassify Invoice Amounts

[Tom Balaban]

Many thanks, Diane.

I was able to accurately reconcile both PayPal and our checking account 
monthly using the old method as I would post each transaction from the 
respective statement. It worked until we started getting payments from a 
3rd-party servicer. Then I end up with a overpayment or a short fall 
depending on what happened at an event.

That meant tightening things up a lot ... a good thing ... We now have 
more entries but much better information.

Tom

------ Original Message ------
From: "Diane Trefethen" <tref at wakerobinranch.com>
To: gnucash-user at gnucash.org
Sent: 12/8/2018 2:50:51 PM
Subject: Re: [GNC] How to Reclassify Invoice Amounts

>Unless I misunderstand your situation, you are a small business, do things pretty simply, and do not have a large accounting dept. If this is so, then you don’t need to reclassify anything. The total billed for your service(s) is Sales and all the “various expenses related to the transaction” are booked as expenses when you enter the bills from YOUR vendor(s), if you are on the accrual basis, or when you pay your bills, if you are on the cash basis. [Side note: One thing you said worries me. “Before I started keeping track of sales by invoice I would just splt the transaction.” IF you “split the transaction” by breaking the invoice total down into income, fees, shipping, etc, what did you book when you paid your bills for those items? Take PayPal. If you used to book $1.75 of the invoice as PayPal Expenses AND you booked your bills from PayPal as PayPal Expenses, then you booked each PayPal fee twice. This would badly distort your P&L statement because you would be showing less revenue than you were actually receiving and more expenditures than you actually incurred.]
>
>Be forewarned that Adrien’s additional GL posts like
>Dr. Expenses:Insurance                          $192.15
>Cr. Assets:Current Assets:Checking                      $192.15
>are a mistake if you book insurance, PayPal, and other expenses when you enter or pay the bills for those items. Doing it a second time will a) throw your checking account out of balance and b) double book your expenses which the IRS will NOT be happy about.
>
>There is a misconception that accounting programs can do everything. They can’t. There are many things that are better tracked separately using spreadsheets and then booked into the accounting program with end-of-month GL entries, like pre-paid insurance and accrued interest, for example.
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