Creating and Posting an Invoice

Cliff McDiarmid cliffhanger at gardener.com
Mon Feb 5 17:18:46 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?
   >
   >OK, so GC's invoice subsystem uses a concept called "accrual
   accounting". You
   >write 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!)
   One more thing on this subject.  Why, when posting the invoice does it
   place the amount in the A/R account as you explained, BUT also in the
   receivable account(current)as a DEBIT!

   thanks

   Cliff


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