[GNC] 5. Re: Pre-Payments into Liabilities (Adrien Monteleone)

davidvernonlong at gmail.com davidvernonlong at gmail.com
Tue Sep 13 15:02:51 EDT 2022



-----Original Message-----
From: davidvernonlong at gmail.com <davidvernonlong at gmail.com> 
Sent: Tuesday, 13 September, 2022 7:58 PM
To: gnucash-user at gnucash.org
Subject: 5. Re: Pre-Payments into Liabilities (Adrien Monteleone)

   5. Re:  Pre-Payments into Liabilities (Adrien Monteleone)

Adrien wrote:
" Several years ago, I played around with pre-payments using a
Liabilities:Customer Deposits account but that was a mess. The way the
Business Features of GnuCash work, it is *much* easier to just Process
Payment, letting it post to AR and then apply it later to an invoice. 
You also get a nice 'Statement of Account' with the Customer Report which
would otherwise not reflect the pre-payment.

IF I would ever encounter the situation that I'm not going to invoice that
customer ever again, and would have to carry the prepayment funds for a long
period of time for some odd reason rather than issue a timely refund, I
would then do a transfer from AR to the Liabilities:Customer Deposits
account and handle from there. But that would be a very odd case."

I entirely agree with Adrien from the point of view of ease of processing
and statement of accounts. However, for audited accounts or accounts
presented to the school board or whatever, negative A/R balances should be
shown as a liability not a reduction in current assets. The GnuCash balance
sheet report shows them as a negative current asset, and this is true with
every other accounting system I have worked with.

We used to make the adjustment of both increasing current assets (A/R) and
customer deposits,  outside the accounting system in the presentational
tool, Excel or whatever, and did not touch the accounting system since it
was only needed a couple of times a year for official reporting.  If the
prepayment became long term and fixed, we would make the adjustment in the
accounts Adrien suggests.

Now I am using GnuCash for a members club in my retirement, that is what I
shall  do.

David Long

> Hello,
> I use GnuCash for a small school. One of our parents paid their entire
tuition amount at the beginning of the year. I have been fiddling with how
to record this.
> 
> We bill monthly; therefore, for the payment that doesn't have a 
> receivable
yet, shouldn't it go into a liability account? Using the "Process Payment"
dialog results in an accounts receivable with a negative balance. This seems
odd to me, but it has been some time since I took accounting. In GnuCash's
system, is an accounts receivable with a negative balance akin to a
liability?






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