[GNC] Contingency Funds was: Re: How to record Personal income tax ?

[Adrien Monteleone]

It is a two pronged approach, not really a one-or-the-other type situation.

By booking the liability your Balance Sheet will correctly reflect your net worth. If you owe money, it should deduct from your net worth. If you don’t book the liability, your net worth appears larger than it really is. (making it look like more of your assets in-hand, are really yours to spend as you wish.)

How important that is to you, or if that runs afoul of any laws in your jurisdiction is not for us to determine.

Using a separate account, real or virtual to segregate funds (assets) is a mechanism to prevent yourself from spending them so you will have the funds when you need to pay the liability. But that isn’t a substitute for recognizing the liability in your books.

Step 1 is recognizing the liability.
Step 2 is setting aside the money to pay that liability later.

Regards,
Adrien

> On Mar 21, 2020 w12d81, at 1:07 PM, Long <Phamhoanglongvn at outlook.com> wrote:
> 
> Hello GnuCash - User mailing list,
> 
> Thank you for helping me. If I following your steps by "SAVE" Account ( Or
> whatever it's mean, in your case: it is contingency fund) to have enough
> money to pay TAX at the end of the year. It's look like make sense more than
> using a Liability to solve the problems.
> 
> Thanks again for your help.
> 
> Regards.