[GNC] Beginner Accounting Question Using GnuCash

David H hellvee at gmail.com
Fri Dec 17 18:44:31 EST 2021


Hi David,

Thanks, my bad I was thinking in terms of my personal Gnucash book not
realising it was more appropriate to be thinking in terms of business books
in Patrick's case.  Lesson learned, glad I'm still learning after all this
time :-)

Cheers David H.


On Sat, 18 Dec 2021 at 09:15, <davidcousens49 at gmail.com> wrote:

>
>
> David,
>
> Patrick's recording is perfectly valid if his purchase of stock is a
> capital expense, i.e. it is intended that the asset will be consumed over
> more thanone  accounting period, and not simply within the current period
> in which latter case it is a direct expense expense.
> The transaction for the  cost of the item sold entory at the time of sale
> of an
> item produced form stock held as an inventory item is a standard accounting
> procedure where capital items are used in the production of items for sale
> in
> Cost Management Accounting ( there are usually other costs also included
> (glue
> binmders, overheads etc).
>
> His problem is that this transaction is not showing up in any report, not
> the
> validity of the transaction itself. My suspicion is that the account is not
> being included in the default account settings for the report.
>
> David Cousens
>
>
> SalesOn Fri, 2021-12-17 at 21:39 +1000, David H wrote:
> > Patrick,
> >
> > Look carefully at point 2, one side of your transaction should be an
> > expense as you are expending funds to buy stock eg Expense >> Stock
> > Purchases rather than Stock on Hand ?
> >
> > Cheers David H
> >
> >
> >
> > On Fri, 17 Dec 2021 at 21:20, Patrick Skelton <patrickskelton at gmail.com>
> > wrote:
> >
> > > Hi,
> > >
> > > I am trying to get my head around double-entry accounting. I think I
> have
> > > kind-of got it. I have just set up a stripped down set of accounts and
> > > tried a handful of transactions, to see how they affect
> profit-and-loss and
> > > the balance sheet. It all seems to make sense except that there is one
> > > piece of information that seems to vanish, and I am worried this means
> I am
> > > doing something wrong.
> > >
> > > My transactions beginning with all zero balances are:
> > >
> > > (N*ote:* I have added some dates to give context to my later question)
> > >
> > >    1. 1st Nov: I pay £100 into the business *Bank* financed by *Owner's
> > >    Equity*.
> > >    2. 2nd Nov: I buy some paper costing £12, which comes from *Bank*
> and
> > >    goes into *Stock on Hand*.
> > >    3. 3rd Dec: I sell a notepad for £12, which credits *Bank* and is
> > >    assigned to *Income - Sales*.
> > >    4. 4th Dec: I transfer the cost of the paper used to make the
> notepad
> > >    (£1.00) from *Stock on Hand* to *Expenses - Cost of Materials*.
> > >
> > > The Balance Sheet shows £111. Liabilities are zero. Retained Earnings
> are
> > > £11, which gives total equity of £111. Thus the sheet is balanced.
> > >
> > > My question is that no matter what report I run using whatever dates, I
> > > cannot see the £12 I spent on stock. All I ever see is the £1 that I
> > > decided was the cost of the paper taken from stock.
> > >
> > > Even if I do reports only for the month of November, I don't see the
> £12 I
> > > paid for stock because the money came from my bank and went into stock,
> > > which are both Asset accounts.
> > >
> > > Is there a better way to do these transactions so that I could ask the
> > > question: how much have I spent on stock this month?
> > >
> > > I am a complete newbie so would welcome any help or advice (short of
> 'get
> > > an accountant', which I would love to but can't afford).
> > >
> > > Kind wishes - Patrick
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