[GNC] Equity Calculation on the Balance Sheet

[Adrien Monteleone]

Playing around with my own Balance Sheet report, I was able to produce a situation where the AP line did not agree with the register or the Aging report.

I had to create the following conditions:

AP needs to have a sub-account with a balance. (so I just moved one of my ‘other liability’ accounts there temporarily as a test)
Then I ran the Balance Sheet Report, and chose the following options:

Set Accounts > "Levels of Subaccounts" = 2 (or one less than the level of that AP subaccount - so that you only see AP, but not any subs in the report)
Set Display > "Parent account balances:" = Subtotal

Then apply.

This gave me a Balance Sheet with an AP line that was more than my AP register and more than my AP Aging report, because it rolled up the sub-account into the total but I hid that sub-account from view. Clicking the AP account link takes me to it’s register, which has a lower balance than the report.

You might want to set, as a test, the “Levels of Subaccounts” to ‘all’ temporarily to see if there are any not usually visible causing this problem.

Finally, for good measure, make sure that only ONE of your liability accounts is of *type* Accounts Payable. (only one can be, and it has to be named ‘Accounts Payable’) You can have plenty of ‘other AP’ accounts, even as children of the main AP account, but they have to be of the general liability type or some other liability type. The AR and AP types are special and are only to be used by the special Business Feature accounts.

Regards,
Adrien

> On Apr 16, 2019, at 10:41 AM, Tom Balaban <tbalabanjr at gmail.com> wrote:
> 
> Hi Adrien,
> 
> Thanks for that explanation.
> 
> On the issue of different amounts in the BS and the aged payables, I don't know where to go to get this resolved.
> 
> The Aged Payables report show $83.65, The bottom of the AP ledger shows $83.65. There are no unmatched lots in the AP ledger. Since we are a seasonable business there have been no changes yet this year so the dates are not an issue. Still the BS shows $465.75. AR is OK.
> 
> Any thoughts on how to track this down will be greatly appreciated,
> 
> Tom
> 
> ------ Original Message ------
> From: "Adrien Monteleone" <adrien.monteleone at lusfiber.net>
> To: "Gnucash Users" <gnucash-user at gnucash.org>
> Sent: 4/15/2019 11:26:14 PM
> Subject: Re: [GNC] Equity Calculation on the Balance Sheet
> 
>> Tom,
>> 
>> Strange that the AR/AP numbers would be different on those two reports. Perhaps it is a date issue on the Aging reports. Make sure they would end on the same day you are running the balance sheet for. The only thing I can think of that might cause this would be bills and invoices that are posted to dates beyond the Balance Sheet date and those aging reports are set to include them. (the Balance Sheet won’t of course, because their date hasn’t arrived) If the Balance Sheet is set for a date beyond all posted invoices and bills and so your aging reports are ’thru’ the same date, then I’m not sure where the problem lies.
>> 
>> Retained Earnings/Losses is a friendly shortcut of GnuCash so you don’t have to ‘Close the Books’ each year to get that figure. (this is the computer age after all)
>> 
>> In this case, the net of Income-Expenses is a loss for now.
>> 
>> If you’d rather have an actual Equity account where you record Retained Earnings/Losses, then as of the date for each end of year, perform the close books procedure. (or close all income and expense accounts to that account manually)
>> 
>> The reason your Balance Sheet is showing a different number than Net Income YTD is that the Balance Sheet is ‘for all time’ not just this year. So effectively, you are only $38.61 from becoming profitable since you opened the books in GnuCash.
>> 
>> Essentially, this wouldn’t change if you used an actual Equity account here. It would show "Equity:Retained Earnings" as "-$38.61".
>> 
>> Regards,
>> Adrien
>> 
>>> On Apr 15, 2019, at 9:20 PM, Tom Balaban <tbalabanjr at gmail.com> wrote:
>>> 
>>> For reasons that I haven't Yet figured out, AR and AP balances are often incorrect on my Balance Sheet but are correct on the Payables and Receivable Aging reports.
>>> 
>>> This forces me to recast the Balance Sheet in a spreadsheet using the correct AP & AR balances. The math is basic but our company is on the cusp of profitability and I'm having problem with the Balance Sheet Report term "Retained Losses". Does this appear when we are not profitable and what does it change to when we are profitable, as I suspect we are beginning last month?
>>> 
>>> I much prefer using Retained Earnings with a negative number to present accumulated losses and my recollection of how the Equity portion is structured is something like the following"
>>> 
>>> Equity
>>> Equity
>>>    Retained Earnings {based on Fiscal year end}
>>> Income Y-T-D
>>> Total Equity
>>> 
>>> FWIW, the Balance Sheet report shows Retained Losses of $38.61 but our P&L shows Y-T-D income as $1,246.95. I agree with the P&L but where does GC get the Retained Losses from?
>>> 
>>> Thanks for reading.
>>> 
>>> Tom