[GNC] Bookkeeping for a club's charity account - use business features?

[Adrien Monteleone]

> \On Aug 27, 2019 w35d239, at 7:36 AM, Michael Hendry <hendry.michael at gmail.com> wrote:
> 
> 
> I was thinking Mike meant that there was something intrinsically incompatible with cash-based accounting which happened when Business Features were added. But you’re saying that it’s only if there are posted and unpaid invoices outstanding at year-end that this is a problem.

Even more precisely, it is only a problem if you include the affected accounts in your reports. Having posted and outstanding invoices is fine because there will be a separate mechanism to ‘realize’ income on a cash basis. (and a separate account for that which *will* get included in reports)

Here’s a little detail:

Invoice Posted
--------------

Dr. A/R				$50
	Cr. Income:Pledges		$50

Accrual method, ‘Income’ = $50
Cash method, ‘Income’ = 0

This is because in accrual accounting, you ‘realize’ income when it is ‘earned’. Posting an invoice, means you’ve already ‘earned’ it. If you were to include all income accounts in the income statement, it would show you an income of $50, which is incorrect on a cash basis. Creating a separate cash-basis income account solves this.


Invoice Paid
------------

Dr. Cash			$50
	Cr. A/R				$50
Dr. Income:Pledges		$50
	Cr. Income:Receipts		$50

Accrual method, ‘Income’ = 0
Cash method, ‘Income’ = $50

(note, you have to do the second part of the above manually or via SX, the first Dr./Cr. pair is done with the ‘process payment’ business feature.)

Now, you’ve moved the ‘accrued’ income to a ‘cash’ income account, when you run the Income Statement report, *only* include the cash account - all will be well even if the ‘accrued’ account is not zero yet - that is, has outstanding invoices. This is also why you don’t have to ‘clear up’ outstanding invoices at year end. (unless unpaid pledges reset to ‘zero’ at that time.)

Your Income Statement would show an income of $50 which *is* correct now, because you’ve received the money. Since you are only reporting on the Income:Receipts account, it doesn’t matter that the Income:Pledges account might reflect some unpaid invoices - it won’t factor into the report.


> 
> I presume that an unposted invoice can be deleted, so it would be possible to prepare invoices when (for example) a member opted in to the Foundation Dinners, and to review unposted invoices periodically - especially in the closing weeks of the year.

You wouldn’t necessarily have unposted invoices. But regardless of posted or unposted, you can’t delete them. You can however assign them to a ‘placeholder’ customer, and/or zero out all the info. The usual recommendation is to change the invoice number to something like “use next” so you can spot it easy in an invoice ‘find’, edit the invoice, and re-use it later.

Regards,
Adrien