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

[David Cousens]

That's a reason for using the Equity:TaxProvision account for recording the
liability rather than directly to an Expense:Tax account when you accumulate
the Liability as per the alternative approach outlined in an earlier post.
Then you can adjust it in Equity before paying the tax and transferring it
to expense.

Each Month
                                           Dr          Cr
Liability:Tax                                       1000
Equity:TaxProvision               1000 

then adjust it when you know what the tax to pay is
                                           Dr          Cr
Liability:Tax                         2000
Equity:TaxProvision                           2000

Then pay the tax and transfer it from Equity to expense(this can be done in
a single 4 split transaction or two two split transactions -  the 4 split
makes it clearer that these are the same financial event).
                                           Dr          Cr
Asset:Bank                                       10000
Liability:Tax                        10000
Equity:TaxProvision                           10000
Expense:Tax                       10000             


David 



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David Cousens
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