Creating and Posting an Invoice
Cliff McDiarmid
cliffhanger at gardener.com
Mon Feb 5 14:12:54 EST 2018
Sent: Sunday, February 04, 2018 at 11:53 PM
From: "Maf. King" <maf at chilwell.net>
To: gnucash-user at gnucash.org
Cc: "Cliff McDiarmid" <cliffhanger at gardener.com>
Subject: Re: Creating and Posting an Invoice
On Sunday, 4 February 2018 23:30:32 GMT Cliff McDiarmid wrote:
> Hi
>
> I've nearly got gnucash running as i want it but i need some advice
on
> posting an invoice which is proving confusing.
>
> I create an invoice where one has to select an Income account; in my
> case a current account. But when it gets to posting the invoice one
> has to select a 'Post to Account' where one has to create a 'A/c
> receivable'. I assume this because of the double accounting, but why
> can't I just select an Income account such as 'Wages' at this stage?
>
>Hi Cliff,
>OK, so GC's invoice subsystem uses a concept called "accrual
accounting". You
>.rite the invoice and expect to be paid at some point in the future.
(end of
>month, 30 days, that sort of thing)
>With that in mind, the income is generated when you create the
invoice, even
>though you don't physically have the cash yet.
>As you write out the line items on the invoice in GC, you select the
relevant
>income account (eg Income:Sales or Income:consulting etc.) When the
invoice
>is "posted" into the GC books, this has the effect of increasing your
income
>totals. (your bank account isn't income, it is an asset account)
>But where to post it to balance the double entry? As far as gnucash
knows,
>you probably don't have the money yet, (assuming you are running
accruals
>"properly"), so clearly the bank account is the wrong place. This is
the
>purpose of the special A/R account. It stores the "earned but not yet
>received" money - and it is the other half of double-entry.
>At some point in the future, when the money actually arrives (maybe in
your
>case that is 1 second later, not 1 month or so!) you "process
payment", which
>decreases the A/R and increases the bank account (income is untouched
at this
>stage. you already earned it!)
>Hope that clarifies a bit.
>Maf.
Many thanks for that Maf, it is clear now. It will take the other
subject up in a separate email.
Cliff
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