Finding out taxable income at the end of the year

[Mike or Penny Novack]

On 3/8/2018 4:06 AM, Maf. King wrote
>>   I cannot look in income:sales to
>> determine how much taxable income I report, because it would include how
>> much I'm owed also.
>>
>>
>> As such, what is the best way to find out how much taxable income I make
>> per year to report on my taxes?
>>
> Hi,
>
> This is the difference between "accruals" accounting and "cash" accounting.
>
> Basically, GC's invoice module uses accruals - the tax is calculated based on
> when you create the invoice, not when you are paid.
This is partially a case of "not a gnucash question"

Maf. King gave you an answer that partially addresses the "what if my 
books are kept accrual but I report taxes on the cash basis?"

But there is another part of this. As anybody in business knows, SOME of 
what you are owed never gets paid. In other words, there needs to be a 
periodic adjustment for "bad debt" and/or the loss when outstanding debt 
is sold to a collector for less than the face amount. Before asking us 
"how do I do this using gnucash?" you need to look up "how this is 
handled in any accounting system". Once you understand THAT (what the 
transactions would be) you might easily see HOW to enter in gnucash or 
you ask us at that point.

I will just give hints (ideas of what terms you might search for) "bad 
debt" (generally an expense)   "journal transactions" (a term for this 
sort of adjustment)

Michael D Novack