[GNC] [GNC-dev] Recording dividend payoffs

[Justin Mathew]

John,

That was a punch line, and a very good one.

I respect your experience and the time you have/are spending with GnuCash support (and perhaps even development). But just because I am new to accounting and you've spend a long time in accounting along with managing the company that pay dividends, the logic behind my suggestion doesn't crumble.

First, when you close your books and credit Retained Earnings account, you can always debit the dividends from this account. Things are fine here. I never disputed this.

Except that this way requires you to close the books. I wanted things to work fine even when books aren't close (for very good reasons), and hence that suggestion. From this thread alone, I realize 3 or 4 people pay off dividends using Expense:Dividends without closing the books.

I also understand that the formal way to pay dividends and record them is to close the books and debit Retained Earnings. Never disputed it but I'll dispute this,

>The claim that it violates the formal rules fails because it's only required when one doesn't follow the formal rules and close Income and Expense to Retained Earnings: In for a penny, in for a pound.

Yes, I am still a beginner. But as far as I know and have read, it is a widely accepted practice among accountants and corporations to use a temporary account (like Equity:Dividend Declared) to record dividends.

So then, why not use Expense:Dividends as a temporary account instead? Again, a variety of reasons. Literally misleading, technically incorrect, confusing for an auditor, confusing for a new accountant, legally incorrect etc.

And that's the reason, I put forward that suggestion (which was subject to discussions and replacement for better solutions) so that those who don't want to close the books can record dividend pay offs the more right way than Expense:Dividends.

Another reason - GnuCash doesn't require people to close books. And hence as a product, if there is a legitimate or widely accepted way to carry out functions (that require to close the books) without closing the books, GnuCash should have it. And by no means is Expense:Dividends a legitimate way for reasons stated earlier.

The options are there on the table. You guys decide. As I mentioned earlier, lot of people use Expense:Dividends without closing the books. All the more reasons to incorporate something to make such users do tasks the more right way. As for me I would close the books to credit Retained Earnings than use Expense:Dividends.

Anyway, if I had misconducted myself, I'd like to apologize.

Thanks again.


-
Regards,
Justin Mathew
mjustin at protonmail.com

Sent with ProtonMail Secure Email.

‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐
On Thursday, April 18, 2019 8:42 PM, John Ralls <jralls at ceridwen.us> wrote:

> Justin,
>
> It's very simple: I've many years of experience with both accounting and GnuCash. I've run a company which paid dividends and used GnuCash to account for it. It works fine the way it is, it just doesn't work the way you want to use it. Too bad.
>
> Then there's your admission to Maf:
>
> > On Apr 16, 2019, at 5:37 AM, Justin Mathew via gnucash-devel gnucash-devel at gnucash.org wrote:
> > Yes, I read this suggestion in gnu tutorial and concepts manual few hours ago infact. I am new to accounting to be honest. Just learning it with a fictitious company and transactions.
>
> Regards,
> John Ralls
>
> > On Apr 17, 2019, at 12:55 AM, Justin Mathew via gnucash-devel gnucash-devel at gnucash.org wrote:
> > And John,
> >
> > > Justin,
> > > No, just you. This is real simple: GnuCash provides two ways to account for reporting retained earnings, including dividends. I'm not asking you to do anything, I'm telling you how GnuCash works. Either you use one of those two ways or you use a different accounting program.
> >
> > We've been over this. And I am telling you again that how GnuCash handles dividends isn't the right way. Recording dividends as an expense is technically wrong. It doesn't decrease the equity. And dividends can be paid and recorded correctly without closing the books in today's age.
> > I am just surprise how reluctant you are to acknowledge that there is an issue with the current system and to discuss a possible solution. You're impossible man!
> >
> > -
> >
> > Regards,
> > Justin Mathew
> > mjustin at protonmail.com