[GNC] Dealing with discounts when not using Business Features

[Stan Brown]

As Michael said, this is more an accounting question than a GnuCash
question. Therefore, the usual caveats about regulations in your country.

I was going to propose the same thing as Vincent, but I forbore because
I don't know what a "bursary" is. But I'll say I quite agree with
Vincent's approach. I think his "what would you want to see on a P&L?"
is the salient point.

When I set up GC for the charity on whose Board I serve, a similar
question arose with donations made by PayPal -- are the PayPal fees an
expense or a reduction of income? I set up a placeholder account
"Income:Net Donations" with two subaccounts, "Income:Donations" and
"Income:Fees". A typical transaction would be
    Debit: Cash $9.51
    Credit:Donations $10.00
    Debit: Fees $0.49
We _don't_ "control each side", in Vincent's words since Paypal is a
separate entity and takes its cut before we get the rest, but even so I
think this is appropriate because then the P&L shows donations net of
Paypal fees, which after all is the amount that we actually collect. In
your case, where you _do_ control both sides, I think it makes even more
sense.

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com

On 2023-05-31 12:46, Vincent Dawans wrote:
> Personally I would create your Discounts and Bursary accounts as income
> accounts, possibly even as subaccounts of your main income account for that
> product/service. Yes they will only have rebates (debits) in them, but they
> are not an expense, they are a form of reduced income (by choice). The
> distinction is important in terms of "true accounting representation".
> Think of it with an extreme case. If I said I charge $1 million for this
> email advice, but then give you a $999,999.99 discount, as a financial
> analyst, would you want to see a P&L with a $1 million income and a
> $999,999.99 expense or just a $0.01 income and zero expenses? Because you
> control each side here (the price charged and the rebate), they are one and
> the same, so it would be the second scenario.
> 
> By it's OK to put it as a "debit" income account, you still have the info
> in the details of the accounts and can get it out in a report to show how
> much income you forfeited, but a high-level P&L will give you the correct
> income (with the rebate) instead of the extra expense.
> 
> Sincerely,
> 
> Vincent Dawans
> 
> On Wed, May 31, 2023 at 10:27 AM Michael Hendry <hendry.michael at gmail.com>
> wrote:
> 
>> More of a bookkeeping query than a GnuCash problem, but here goes…
>>
>> I am a trustee of a local jazz education charity, the main event being a
>> jazz summer school with residential and non-residential options.
>>
>> We offer discounts of 5% for two or more family members attending, 10% for
>> group bookings, and also offer bursaries, but none of is these recorded
>> explicitly in the books at the moment.
>>
>> I plan to introduce two new accounts - Expenses:Discounts and
>> Expenses:Bursary - and use these to “top-up” any individual’s payments to
>> Income:Course Fees to the appropriate level. This way, each player will be
>> represented in Income:Course fees as having paid either the full
>> residential fee or the full non-residential fee, and under- or
>> over-payments will be easer to pick up using a saved report, which can also
>> itemise the discounts and bursaries using the Memo fields to identify the
>> player (as opposed to the person paying, recorded in the Description) and
>> the type of discount or bursary.
>>
>> Does anyone spot any elephant traps that I’m missing?
>>
>> Regards, and thanks,
>>
>> Michael