[GNC] When closing books, equity statement report is incorrect

[Adrien Monteleone]

On 1/3/24 12:19 PM, Quinn Wood wrote:
> You already give advice on how to keep books on the wiki. There is an
> entire page telling people you don't need to close your books in GnuCash
> that proceeds to give people workarounds for how to do some of the things
> closing your books accomplishes. Adding this workflow isn't accounting
> advice, and frankly people are way beyond that. Even if this was accounting
> advice, at least it would be correct under GAAP and IFRS unlike the
> explicit advice that retained earnings are the same as net income or the
> implied advice that retained earnings belong on a sole proprietor's or
> partnership's balance sheet.

Be careful with the use of 'you'. With a handful of exceptions, everyone 
on this list is just another user like yourself, not developers. A few 
have contributed to the wiki, but short of specifically speaking to the 
page author of wiki article, using a collective 'you' is quite out of place.

For the record, GnuCash is designed for Personal & Small Business 
accounting. How 'small' is intended here, I'm not sure. I recall some 
brief discussion on this list a few years ago.

But it doesn't stop you from following standards if you need to.

What it likely will never do is offer special features or reports that 
are more geared toward special business forms like formal corporations.

It won't stop you from doing old-fashioned accounting for them, however.


> On the flip side, the workflow people keep recommending on the wiki and
> mailing list does conflict. You have to keep a paid dividend on your books
> as a payable liability forever,  put it on your books as an expense (to
> fraudulently reduce equity and reducing net income), or just never declare
> one. Do that and see how quick taxing authorities, lenders, or investors
> call foul.

It seems your use case is one that benefits from more formal processes. 
Then use them. The usage advice on the wiki and here on the list is for 
Personal, less formal needs.

It has been some time since I looked at this topic, but if I recall 
correctly, Dividends Payable go on your books at recognition, and while 
they remain forever (like every other liability), they are zeroed out at 
disbursement. (upon payment) And Paid Dividends *are* supposed to reduce 
Equity as they are disbursements of that Equity to Owners and no longer 
retained by the Corporation. That isn't fraud. That is how you account 
for Dividends.

Regards,
Adrien