[GNC] automatically account for gst on random purchases

[john]

> On Jun 20, 2023, at 00:11, flywire <flywire0 at gmail.com> wrote:
> 
> 
> There is an incredible amount of keystrokes, clicks, and human memory
> recall to pay a bill:
> 
> Business, Vendor, New Bill, Date Opened:20/06/2023, Vendor: Random, OK
> Expense account: Expenses:Auto:Fuel, Quantity: 1, Taxable, Tax included:
> Select, Tax Table: GST on Purchases [default]
> Enter
> Post bill (so it can be paid), OK
> Pay, Select Transfer Account: Checking Account, OK
> 
> Sample Transaction
> Date      Description
>    Account                                Debit   Credit
> 20/06/23  Random
>    Expenses:Auto:Fuel                 $3,000.00
>    Liabilities:GST:GST on Purchases              $300.00

That's a mistake, you got it right below

>    Assets:Current Assets:Checking Account      $3,300.00

> 
> General Journal
> Date      Description
>    Account                                Debit   Credit
> 20/06/23  Random
>    Liabilities:Accounts Payable       $3,300.00
>    Assets:Current Assets:Checking Account      $3,300.00
> 20/06/23  Random
>    Assets:GST:GST on Purchases          $300.00
>    Expenses:Auto:Fuel                 $3,000.00
>    Liabilities:Accounts Payable                $3,300.00

Does Australia let you deduct GST on overhead expense from that paid on product sold, or only VAT incurred in COGS? If it's only the latter I'd think auto fuel would be a poor example. The problem with your proposal if you change that to some actual input--a process chemical, say--is that you don't expense those when you purchase them: It's an asset transfer, DR Assets:Inputs:Process Chemicals:SF6 (just picking a random process chemical from one of my former lives in semiconductor manufacturing), DR Assets:GST:GST on inputs, CR Liabilities:Accounts Payable.

 Expending the process chemical is another asset transfer, DR WIP, CR inputs *and* DR GST on WIP, CR GST on Inputs.

When the product is finished its transferred from WIP to Finished inventory and the accumulated GST would be transferred too: DR Finished Inventory, CR WIP and DR GST on finished inventory, CR GST on WIP.

You book the expenses when you sell product: DR:Assets:Accounts Receivable, CR Income:Sales, DR Expenses:COGS, CR Assets:Finished Inventory; DR Expenses:GST on sales, CR:GST on finished inventory, CR Liabilities:GST.

To make that work the way you say that Quickbooks does it you'd need the Expenses:COGS to be broken out by product and each product's BOM and break out the right proportion of each sale into each BOM account. That seems to me to be more complicated than separating the value and GST at purchase time.

GnuCash has tax tables on bills just like on invoices, so once you've set up your input GST schedules you only need to apply the right one to each line item. You'll have two sets, one for inputs that goes to an asset account and one for overhead that goes to an expense account. If your GST/VAT regime has a lot of different rates then take some care naming your tax tables so it's easy to remember which one to apply to each line item.

But either way it's a lot of manual work. That's why I keep repeating that GnuCash is suitable only for very small retail operations and completely unsuitable for any sort of manufacturing. There's better software out there for those kinds of businesses. Don't waste time trying to convince us to turn GnuCash into a competitor for Odoo (it isn't going to happen, we don't have the resources), just use Odoo if that's what you need. Geert does, so what better endorsement do you need?

Regards,
John Ralls