One account for both Income and Expenses possible?

[Adrien Monteleone]

Norbert,

If the vegetables, fruits and handicrafts that you buy are purchased for resale as your inventory, then yes, you can and should, use one account to track them. (not by quantity, but by value)

Because you are also a manufacturer, you might also have a ‘work-in-progress’ account at least for the handicrafts. (the produce items would depend on the actual work flow from being attached to the plant to being sellable goods, if there is an in-between state, you should probably track that) These should all be asset accounts. (neither expenses, nor income)

Here’s an example:

Assets:Current Assets:Inventory:Vegetables
Assets:Current Assets:Inventory:Fruits
Assets:Current Assets:Inventory:Handicrafts

----------

For products that you have started to make but not finished yet:

Assets:Current Assets:Inventory:Work-In-Progress (again, if more than one type, use sub-accounts for better detail)

for the raw materials that go into making the handicrafts until they become part of ‘work-in-progress’:

Assets:Current Assets:Inventory:Raw Materials

and possibly also:

Assets:Current Assets:Supplies

----------

To track the cost of goods as you sell them (or conduct a periodic inventory) you’ll need this account:

Expenses:Cost of Goods Sold

you might also need:

Expenses:Cost of Goods Sold:Spoilage/Damaged
Expenses:Cost of Goods Sold:Samples

and optionally:

Expenses:Cost of Goods Sold:Quality Control

----------

When you buy inventory to resell, you will post it to A/P and your line-items in your bills should be posted to the appropriate inventory asset account.
When you sell inventory, you post it to A/R and your line-items in your invoices should be posted to your respective Income accounts. You might breakdown your sales into sub-accounts by category or type of inventory like so:

Income:Sales:Vegetables
Income:Sales:Fruits
Income:Sales:Handicrafts

----------

If you are making these buying and selling entries manually instead of using the business features, here’s what they should look like:

Sale:
Dr. Assets:Current Assets:Cash
	Cr. Income:Sales:Vegetables

Purchase:

Dr. Assets:Current Assets:Inventory:Vegetables
	Cr. Assets:Current Assets:Cash

----------

If you are running a perpetual inventory system, you would also create a transaction for each sale that debited Expenses:Cost of Goods Sold for the cost-value of the items on the invoice and credited the respective Inventory asset account for those same values. (reducing the asset, and transferring the value to an expense)

for example:

Dr. Expenses:Cost of Goods Sold
	Cr. Assets:Current Assets:Inventory:Vegetables

----------

If you are running a periodic inventory system, you would instead physically count inventory at the end of each period. Then you would calculate the basic inventory equation:

Starting Inventory + Purchases - Ending Inventory = Cost of Goods Sold

Then make a single transaction debiting the COGS expense account and crediting the respective Inventory asset accounts.

Dr. Expenses:Cost of Goods Sold
	Cr. Assets:Current Assets:Inventory:Vegetables
	Cr. Assets:Current Assets:Inventory:Fruits
	Cr. Assets:Current Assets:Inventory:Handicrafts

----------

With a perpetual system, you will still likely want to periodically verify your inventory, in which case you’d make one-item correcting entries to as with the periodic system. You wouldn’t need the starting inventory or purchases amounts, just the difference between expected ending inventory and actual, that difference would be expensed to an account like this one:

Expenses:Cost of Goods Sold:Shrinkage

This is to account for ‘missing’ inventory where you can’t identify a reason for it being missing. (if you knew the reason, you’d likely put it under ‘spoilage’, ‘samples’ etc.)

----------

IF on the other hand, the vegetables, fruits and handicrafts you buy are for your OWN use, and not for resale, then NO, you should not lump those together with your inventory. Those should be either expensed directly, or held as an asset and expensed as you actually use them. (similar to how the inventory/COGS accounts work, but not using those exact same accounts since the items aren’t part of sales operations)


Regards,
Adrien

> On Feb 10, 2018, at 10:22 PM, Norbert Klein <nhklein at gmx.net> wrote:
> 
> I am a complete newcomer to GNUcash, using version 2.6.19 on Windows 10.
> 
> My name is Norbert, living in the countryside in Cambodia.
> 
> This is my first posting.
> 
> Apologies for my very simple question. I would appreciate to get help.
> 
> I live on a farm – we produce, sell, and buy vegetables, fruits, and handicrafts.
> 
> When I set up a GNUcash system it created an Expense and an Income section, and under them I created specific accounts and sub-accounts.
> 
> When I now enter something like “Selling vegetables” I can enter the price under “Charge/Income” into Income. - When I enter something like “Buying vegetables” I can enter the income under “Expense/Rebate” into Expenses (and as a double-entry to Cash, increasing or decreasing).
> 
> The same for fruits, and for handicrafts.
> 
> But could I instead set up an account “Vegetables” where I can enter both BOUGHT Vegetables and SOLD Vegetables? (same for fruits and handicrafts)
> 
> When I tried to create such an account, I can select only ONE Account Type: Expense or Income.
> 
> Please kindly advise.
> 
> 
> Norbert
> 
> 
> 
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