[GNC] Your Classification / Tagging Implementation

doncram doncram at gmail.com
Mon Nov 9 18:42:44 EST 2020


Gal - Well-stated question, except you omit description of the problem in
language of accounting as taught to, learned by, and understood by
accountants of the classical type, i.e. CPA's, students and graduates of
business programs, accounting researchers and educators.  Which is to
describe the feature lacking as JOB COSTING.  I.e. to allow a company or
nonprofit the ability to use identifier codes to indicate specific JOBS,
e.g. for a home renovation business to identify both revenues and expenses
associated with a given construction project, or for a nonprofit to
identify different programs, or for a catering firm to identify different
gigs.  And to support budgeting and profitability reporting in summary and
in detail, BY JOB.  JOB COSTING is included in the second of two intro
courses in accounting that are required for all undergraduate business
majors (whether Marketing or Entrepreneurship or Finance or whatever is
their specific major) in the U.S., for example.

The statement of the problem in terms of adding "categories" or
"tagging" reflects
what I think may be characterized as "the computer programming world" (I'd
welcome better characterization) and to some extent modern accounting
software world of Quickbooks (and probably some other accounting software)
which allow for "classes" in addition to "jobs".  Classes as given in
Quickbooks are useful, e.g. for a nonprofit to distinguish between "Program
services" vs. "Administrative" vs. "Fundraising" for a U.S. nonprofit's
required reporting on IRS form 990, and probably have other purposes, but
are not part of the general corpus of what's covered in accounting
education, while JOB COSTING is.  (Quicken's "categories" were equivalent
to regular _accounts_; Quicken did not support job costing.)

In your application for a person's accounting, "Vacations" or more specific
"Vacation-Portugal 2019", "Vacation-Thailand 2020" could be designated as
"jobs", probably with job numbers.  In Quickbooks' "Customer:Job"
terminology, you'd use "Vacation" as a "customer" and then "Portugal 2019"
and "Thailand 2020" as "jobs".  For nonprofits, the "Customer" would be one
grant source, and "Jobs" would be the 2019 grant, the 2020 grant, etc. and
it can be very important / essential for a nonprofit to provide exact
tracking of their expenditures related to one of these specific grants or
another.  The "Customer:Job" terminology for the fields in Quickbooks apply
most naturally for businesses which have multiple contracts or projects
over the years for major customers.

About your first suggested workaround strategy of using "#code" tags within
a memo field, I suppose it could sort of work, _if_ it is possible to
design custom Income Statement reports, Balance Sheet reports, etc. in
GnuCash specific to each defined tag.

About your second suggested workaround, expanding the chart of accounts for
an entity, that has been repeatedly recommended by GnuCash user-list
commentors, say when a catering company owner asks "can I use gnucash" but
is not helpful.  A firm wants reporting by type of expenditure account
(e.g. food & beverage purchases, staffing costs, equipt rental, etc.) AND
it wants reporting by JOB.

I can't imagine recommending GnuCash for any person or firm or nonprofit
which needs, or would seriously benefit from, JOB COSTING (and it's getting
hard for me to imagine any entities which would not benefit from that).  So
for myself and for my nonprofit and forprofit clients, I use Quickbooks'
versions (e.g. Desktop Pro) which include JOB COSTING.  The feature of JOB
COSTING is among my top 5 recommendations/requests for what GnuCash should
add.  So short answer: I don't see either workaround working.

 sincerely, Don Cram

Say I spend 100€ at a restaurant during a vacation in Italy.
The obvious transaction is a 100€ credit to checking account and 100€ debit
to Expenses:Eating out
But I would also like to be able to track the vacation expenses, so I have
to classify all transactions took place during the vacation, for example
with a #italy2020 tag.

Summarizing all discussions I've read, there are two common workarounds, or
ways to manually implement classification in gnucash:

1. By adding the tag #italy2020 to the description, note or memo field of
the transaction.
The transaction report can then filter transactions by the tag string.

2. By creating an additional account, called italy2020, and change the
transaction splits in the following way:
Cr. Assets:Checking 100€
Dr. Tags:italy2020 100€
--
Cr. Tags:italy2020 100€
Dr. Expenses:Eating out 100€

On Mon, Nov 9, 2020 at 3:14 PM David Cousens <davidcousens at bigpond.com>
wrote:

> Will,
>
> The confusion often arises because your bank regards a savings/checking
> account in your name as a liability in their books while in your own books
> it is an asset. Conversely your credit card is an asset in the bank's books
> and a liability in yours
>
> See
>
> https://www.gnucash.org/docs/v4/C/gnucash-guide/chapter_accts.html#:~:text=The%20accounting%20equation%20that%20links,rearranged%20Assets%20%2D%20Liabilities%20%3D%20Equity
> .
>
> Wikipedia also has a few good articles dealing with the Accounting equation
> and Debits and Credits to accounts.
>
> Summary Accounting equation
> Assets = Liabilities +Equity + Income - Expenses
>
> If you rearrange it as
> Assets +Expenses = Liabilities +Equity +Income
> then
> Increases to account balances of accounts of the type on the LHS are Debits
> and decreases are Credits
> and conversely
> Increase to account balances for accounts on the RHS are Credits and
> decreases are Debits.
>
> David
>
>
>
> -----
> David Cousens
> --
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