[GNC] Posting a bad debt

[Greg Feneis]

 Revenue is money you have collected.  I don't think an invoiced amount is
revenue until it has been collected. When a payment cannot be collected,
that uncollected payment is not an expense. An expense is revenue spent in
exchange for a good or service.

Kind regards, Greg Feneis
(Galaxy S7)


On Tue, Apr 9, 2019, 16:47 Adrien Monteleone <adrien.monteleone at lusfiber.net>
wrote:

>
>
> > On Apr 9, 2019, at 6:07 PM, Greg Feneis <mfeneis at gmail.com> wrote:
> >
> > Since people are trying to associate a non payment with an expense
> account, does not getting paid by a customer actually constitute an expense?
>
> Generally, yes, it is revenue earned, but needs to be deducted so as not
> to affect income because it wasn’t actually collected.
>
> Income = Revenue - Expenses (accounting text book definition)
>
> >
> > I imagine in business, the big concerns with expenses are tracking where
> the revenue that doesn't become profit goes, and (at least in the US)
> getting tax deductions for as many deductible expenses as possible to
> minimize  tax liability.
>
> Non-collectible receivables are reductions to Income in a similar way that
> Discounts and Allowances are. One way to do that is via an Expenses:Bad
> Debt account. (again, generally)
>
> >
> > As a sole proprietor, I think when I can't collect an invoiced amount,
> that's just income I can't receive.  I don't think it's an expense.  It's
> not revenue spent on something, and it's not tax deductible, AFAIK.
>
> Depends on your jurisdiction tax laws and the exact legal form of the
> business.
>
> >
> > Sorry, I don't mean to hi-Jack the thread, it's kind of related.
> >
> >
> >
> >
> > Kind regards,
> >
> > Greg Feneis
>
> Certainly, related, but the answer for any specific situation should be
> given by a competent local CPA. My recommendation was for the generic
> formal treatment of the situation.
>
> We don’t give actionable tax or accounting advice here, but rather how to
> accomplish accounting tasks using GnuCash.
>
> Regards,
> Adrien
>
>
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