Richard The general rules in accounting practice are that transactions are recognised in a business' books as income when they are earned and as expenses when they are incurred unless affected by other business or taxation legislation. This is the position for accrual accounting.
Some smaller businesses are permitted to operate on a cash accounting basis in many jurisdictions. Usually there is a turnover threshold (or similar) under which the business can use cash accounting where income is recognized when received and expenses recognized when payment is made. This generally simplifies cash flow calculations which gives small business owner's better management control. When is income earned? The usual criteria is completeion of a job or as defined by a contract where part payments are involved and an invoice should be issued to the client dated at that time. Expenses are generally considered to be incurred at the point where you enter into a contractual agreement (formal or informal) to purchase goods or services not when you make actual payment for them. These general rules can be overridden by specific legislation and reporting requirements for your type and scale of business which can vary considerably with the legal jurisdiction in which the business is operated and should not be necessarily considered as being applicable in any given situation. Specific accounting advice relevant to your jurisdiction should always be obtained from a qualified/licensed accountant in your jurisdiction. David Cousens On Mon, 2024-04-08 at 17:11 -0500, R Losey 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. _______________________________________________ gnucash-user mailing list gnucash-user@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.
