[GNC] Recording transactions (date)

Tue Apr 9 14:07:08 EDT 2024

R Losey,
"I thought "floating a check" means that one issues a check, knowing that there isn't money to cover it, but planning to deposit funds before the check is presented for cashing."  That is actually called check kiting and is actually, I was going to say technically, but actually is proper, illegal in the US.

And you are correct, that from an accounting point of view the actual transaction date is the correct date, not the cleared or posted date of the recipient.  Your third point is correct also.

Here is a definition of kiting:

  *   "Process:
     *   The kiter writes a check from one bank account (Bank A) to another (Bank B), even though there are insufficient funds in Bank A.
     *   Before the check clears at Bank B, the kiter withdraws funds from Bank B" or this could be another bank "and deposits them back into Bank A.
     *   This cycle may be repeated multiple times, relying on the float time (the time it takes for a check to clear) to stay ahead of the fraudulent checks.
  *
Example: Imagine writing a check for $1,000 from Bank A to Bank B, even though you only have $100 in Bank A. Before the check clears at Bank B, you withdraw $1,000 from Bank B and deposit it back into Bank A. The net result is a series of fraudulent withdrawals based on uncleared checks."

  The red comment on the second line of the second item is mine.

Thank You,

Gyle McCollam

Gyle McCollam

gmccollam at live.com<mailto:gmccollam at gyleshomes.com>           email

________________________________
From: gnucash-user <gnucash-user-bounces+gylemc=gmail.com at gnucash.org> on behalf of Kalpesh Patel <kalpesh.patel at usa.net>
Sent: Tuesday, April 9, 2024 1:06 PM
To: 'R Losey' <rlosey at gmail.com>
Cc: gnucash-user at gnucash.org <gnucash-user at gnucash.org>
Subject: Re: [GNC] Recording transactions (date)

In the end, monies is what is “float”. That is what I remember from finance course number of decades ago; it is more of money function rather than time function.

Anyways, I also have pondered with that “delay” between when one has “started” the transaction and when one has “completed” the transaction. The way I am dealing with it is to denote the transaction on the day I actually made it and then when reconciling it update the date as it appears on financial institution side. If one really wants to account for it then there would be an intermediary “floats” account to which you would post the transaction when “started” and then when it “completes”, another transaction would be posted from that “floats” account into the final account. This “floats” account would always be running close to zero unless a check sent that has never been cashed which would show up here. I would think that this “floats” would be a liability account…

From: R Losey <rlosey at gmail.com>
Sent: Tuesday, April 09, 2024 12:44 PM
To: Kalpesh Patel <kalpesh.patel at usa.net>
Cc: gnucash-user at gnucash.org
Subject: Re: [GNC] Recording transactions (date)

I thought "floating a check" means that one issues a check, knowing that there isn't money to cover it, but planning to deposit funds before the check is presented for cashing.

But perhaps you mean "float time" -- that may well be the correct term. I was just interested in knowing what people here (many of whom have a closer acquantaintence with accounting than I do) thought about using the actual date of the transaction versus using the cleared date of the transaction.

Clearly, the "cleared" date is when the money actually transfers, but (to my mind), one doesn't have an accurate picture of one's finances if there is pending money to be removed from an account.

On Tue, Apr 9, 2024 at 7:26 AM Kalpesh Patel <kalpesh.patel at usa.net <mailto:kalpesh.patel at usa.net> > wrote:

In the states, isn't that what is called "floats"?

-----Original Message-----
From: Liz <edodd at billiau.net <mailto:edodd at billiau.net> >
Sent: Monday, April 08, 2024 6:50 PM
To: gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
Subject: Re: [GNC] Recording transactions (date)

On Mon, 8 Apr 2024 17:11:37 -0500
R Losey <rlosey at gmail.com <mailto:rlosey at gmail.com> > wrote:

> Since I first learned about recording transactions, I have always
> dated a transaction on the date I wrote the check; similarly, when
> entering credit card transactions, I use the date that I actually
> used the credit card.
>
> Recently, however, I was having a discussion with a friend and he
> said that he uses the bank or credit card date of entry for all of
> his transactions.
>
> I thought this was strange - probably because it is different from the
> method I've used all of my life. Perhaps I am the odd one... or
> perhaps it's merely a matter of choice, so I thought I'd bring it up
> to this list to see what people think about it.
>
> From (a very brief) research about this topic, perhaps this is the
> difference between cash basis accounting and accrual accounting?
>
>
> After thinking about it for a bit, one issue with using the date that
> the transactions occur is the reports, especially if one has repeating
> transactions.  For example, if the satellite service bill is paid each
> month on the 28th, using my method, I record a transaction on the
> 28th. My friend will see it on the 29th or 30th, but if the weekend
> or holiday hits just right, it can be the 1st or 2nd before he sees
> it. In the long run everything should be the same, but the monthly
> sub-totals can look odd. Checks can be even worse... someone may hang
> onto one for weeks.
>
> I'd appreciate thoughts on the topic.

I think it is a philosophical difference.
There are legal ramifications, especially when you are spending money.
If you future date transactions you may spend money you don't actually
have. In my jurisdiction a business doing this is in big trouble, for
"trading while insolvent".
It is not the difference between cash and accrual accounting, but is
part of the differences.

Liz

_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
To update your subscription preferences or to unsubscribe:
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.

--

_________________________________
Richard Losey
rlosey at gmail.com <mailto:rlosey at gmail.com>
Micah 6:8

_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org
To update your subscription preferences or to unsubscribe:
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.