Re: Invoice & Bill Posting Date Issues Across Multiple Periods

[DaveC49]

Hi Adrien,
Add ressing this point: 
"Pre-paid expenses are a special case, but I should think it possible to
address it with the business features somehow. I’ve thought of using special
clearing accounts but I can’t seem to figure where they might go. Posting a
bill for a pre-paid expense (but not yet actually paying it) produces a
liability balanced by what exactly? You don’t yet have a new asset because
you haven’t paid the bill yet. You don’t have an additional liability. You
haven’t realized any income or expense and your equity position hasn’t
changed. What should balance Liabilities:AP for an as yet un-paid pre-paid
expense? "

I think this goes to the differences between accrual accounting and cash
accounting as a separate issue from sales/ purchases made on credit which is
the real purpose of the A/R and A/P accounts. They are not specific to
accrual accounting but may apply for both.

If for example you purchase insurance in advance to cover a specific period
with a specified start date and end date for the cover but you are to be 
invoiced at a later date by the insurer, then you actually purchase the
insurance at the time you enter into the agreement to buy the insurance.
Under accrual accounting you would record the purchase at that date.

At this point I would debit an Asset:Prepaid Insurance for the agreed amount
and credit a Liability:PrepaidInsurance for the agreed amount to record that
purchase in your accounts. 

When you enter the period which the insurance provides cover, you would then
expense the insurance. Depending on the nature of the business you might do
this monthly, for example. Each monthly transaction would be a credit of the
appropriate fraction of the agreed amount to the Asset:PrepaidInsurance
account and a debit to an Expense:Insurance account for each month of the
period of the cover. This satisfies the matching principle by matching the
timing of the expense to the timing of the income earned as a result of
incurring that expense. 

When you receive the invoice for the insurer then an appropriate action
would then be to raise a Bill crediting Liability:A/P for the agreed amount
with a corresponding debit to Liability:PrepaidInsurance for the same amount
as the balancing split of the transaction.

The final transaction would be when you pay the bill with a credit to An
Asset:Bank account and debit to the Liability:A/P account.

I haven't tested how Gnucash's business feature, particularly the reporting
handles the above, specifically as yet but will try it out.

For a Cash Accounting treatment, you would still raise Bill when the insurer
sends you their invoice debit the Liability:A/P and crediting
Expense:Insurance posting it at the date of the invoice. You would then
record the payment as above when the payment is actually made to them. Where
this runs into problems in calculating profit and loss is when the period of
insurance does not match the accounting period (and particularly if premiums
were increasing significantly annually). 

One appropriate treatment for this would be to then capitalise the value of
any unexpired insurance at the end of the accounting period and then expense
it in the next accounting period. A pair of transactions, one transaction
debiting an Asset:UnexpiredInsurance account and crediting the
Expense:Insurance account in the current period with a corresponding
reversing transaction recorded during the next accounting period, would
achieve this. This would have to be allowable under the applicable
legislation which authorises the use of Cash Accounting of course.

"When entering a bill or invoice, each line item allows you to put a date. 

When posting that bill or invoice, only the posting date is used - not the
individual line-item dates. "

You would in principle adopt a similar approach in accrual accounting for
recoding income earned but not yet invoiced.

When you perform the work debit an Assets:UnbilledWork account for the
amount of the work and credit a sutable  Income: account. This records the
income in the accounts at the time the work is carried out.

When you bill the customer and raise the invoice and post it, you debit
Assets:A/R and credit Assets:Unbilled Work with the line dates matching the
dates of debits to this account as the work was performed covered by this
invoice. 

Then when payment is received from the customer your Asset:Bank account is
debited and the Liability:A/R account is credited for the amount of the
payment.

I think the above treatment meets the income recognition principle and the
matching principle in the GAAP and is necessary to do so, not just as a
carry over from paper ledgers, but an essential part of meeting those
principles. 

One of the difficulties is that what is meant by GAAP may be defined
differently in different jurisdictions. Not all countries, notably the US
and with Brexit possibly the UK, have adopted the IFRS standards specific
version or equivalent of the GAAP and some who have may 

Re: Finance-Quote Price Issue

[Wm via gnucash-user]

On 20/11/2017 00:37, Richard Ullger wrote:

There is an issue with prices for UK funds and investment trusts
downloaded on a Saturday and Sunday which are appearing 100 times too
small. When these prices are retrieved Monday to Friday they are
correct. Prices for stocks and bonds are not affected.

The issue is affecting the two quote sources I am using, alphavantage
and mstaruk.


Is there any news on this?  I am getting it too except in my case it is 
LSE traded ETFs at all times.


Unless someone has an update I'll try explaining it my way, possibly in 
a new thread with more detail.


Meanwhile, when I first saw this I thought it was a GBX issue (i.e. the 
decimal was being shifted the wrong way in an attempt to make it GBP) 
but that didn't explain some of the other phenomena.


My instinct suggests the problem is outside of the gnc universe but I 
haven't been able to work out who is doing what yet.


In practical terms this isn't a big deal for me, I update prices once a 
week at most and have 3 stocks that are affected and I just edit the 
prices by hand by shifting the decimal point to the correct place.  For 
someone else this could be a genuine PITA.


--
Wm



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Re: Invoice & Bill Posting Date Issues Across Multiple Periods

[Adrien Monteleone]

Thanks Maf., 

But it seems the entire invoice posts together on the posting date, not by 
line-item date. I just double checked several of them that crossed period 
boundaries.

I’m in the U.S., not sure what the specific rules are on invoice time frames, 
but GAAP would say the invoice/bill date doesn’t matter - what matters is when 
you actually do the work or incur the expense.

This isn’t strictly a tax reporting issue anyway. (other than how recognition 
affects net income that is)

I’m more concerned with an accurate financial performance picture, which is 
what GAAP is for.

Apparently the business features make little headway over pen and paper in this 
regard.

Thanks though.

Regards,
Adrien

> On Dec 9, 2017, at 4:23 PM, Maf. King  wrote:
> 
> On Saturday, 9 December 2017 21:06:23 GMT Adrien Monteleone wrote:
> 
>> The same can easily happen for invoicing customers. If I generate an invoice
>> in December to a customer for work done in October and November, I can’t
>> realize the appropriate raevenue in each period. I can only choose one month
>> or the other. (or more likely, December since that will be the posting date
>> - which is entirely incorrect)
>> 
> 
> Hi Adrien,
> 
> without opening GC to see if this is correct, my impression is that if I 
> create an invoice and have 2 line entries
> 15-Oct-2017  work done income:consulting £100
> 15-Nov-2017 other work done income:making £300
> 
> both on one invoice posted 3-Dec-2017, then the *income report* by month 
> would 
> show the correct items within the correct month totals.  Happy to be told 
> that 
> this is not the case, as I haven't explicitly tried it before posting.
> 
> Not withstanding that, my understanding is that under UK rules the document 
> date is the relevant one for tax reporting - I always set my posting date to 
> the document date.  And IIRC, an invoice should be raised within 2 weeks of 
> the "sale" being made. Of course, other jurisdictions may work differently.
> 
> 0.02
> Maf.
> 
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Re: Invoice & Bill Posting Date Issues Across Multiple Periods

[Maf. King]

On Saturday, 9 December 2017 21:06:23 GMT Adrien Monteleone wrote:

> The same can easily happen for invoicing customers. If I generate an invoice
> in December to a customer for work done in October and November, I can’t
> realize the appropriate raevenue in each period. I can only choose one month
> or the other. (or more likely, December since that will be the posting date
> - which is entirely incorrect)
> 

Hi Adrien,

without opening GC to see if this is correct, my impression is that if I 
create an invoice and have 2 line entries
15-Oct-2017  work done income:consulting £100
15-Nov-2017 other work done income:making £300

both on one invoice posted 3-Dec-2017, then the *income report* by month would 
show the correct items within the correct month totals.  Happy to be told that 
this is not the case, as I haven't explicitly tried it before posting.

Not withstanding that, my understanding is that under UK rules the document 
date is the relevant one for tax reporting - I always set my posting date to 
the document date.  And IIRC, an invoice should be raised within 2 weeks of 
the "sale" being made. Of course, other jurisdictions may work differently.

0.02
Maf.

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Invoice & Bill Posting Date Issues Across Multiple Periods

[Adrien Monteleone]

I noticed something about the business features that isn’t working as expected, 
or at least not optimally.

When entering a bill or invoice, each line item allows you to put a date.

When posting that bill or invoice, only the posting date is used - not the 
individual line-item dates.

While I can see that this behavior might make sense to most people, it seems to 
me to be a carry-over from the days of paper ledgers that is very inefficient.

In order to abide the matching principle, expenses should be realized in the 
period they are incurred. Revenue should be realized when it is earned, that 
is, goods delivered or services rendered.

In both cases, neither the generation of reports (bills and invoices in this 
case) nor the receipt of actual money, should influence the date that expenses 
or revenue are recognized.

It is not uncommon to be sent a bill generated in one period for a previous 
period and not actually received until the 3rd period and possibly even paid in 
a 4th or later period.

The same is possible for invoicing your customers. It is entirely possible to 
invoice a customer for work done in a previous period (or multiple previous 
periods - such as job-based billing) and not receive payment for it till much 
later.

GnuCash has no issue with letting you post bills and invoices independent of 
actual money exchange. (the whole purpose of the business features) But it 
seems it does not allow you to recognize revenue and expenses in their proper 
periods.

If I receive a bill dated 12/10/17 on 12/17/17 for expenses I incurred in 
November 2017, I have to artificially back-date the posting date of the bill. I 
can put the opening date as 12/10/17, but I can’t ‘post it’ to the date I 
actually entered the transaction in my books. (this might be an auditing issue 
later) I have to ‘fake’ the posting date to some day in November 2017 for the 
expense to show up as being realized in that period.

To complicate things, it is quite possible, I receive this bill dated 12/10/17 
on 12/17/17 listing charges incurred in not only November, but also the end of 
October, and possibly even early December.

Another example is being pre-billed. I routinely receive a bill for a six-month 
auto insurance policy in the period prior to when it is due. I then use a SX to 
expense the insurance each month as it is ‘used.’ So the bill is generated on 
11/17/17 due 12/26/17. I received it on 11/24/17. I can enter the bill the day 
I receive it and put the ‘opening date’ as 11/17/17, but if I post it the day I 
enter it, my "Assets:Current Assets:Pre-paid Expense:Auto Insurance" account 
increases as of 11/24/17. But I don’t actually pay this bill until say 
12/20/17. The point when I pay the bill is the date I really have a pre-paid 
asset. NOT the date I post the bill. If I wait to post the bill till the actual 
date I pay it, I get no notice in the Bills Due Reminder and I don’t have an 
actual record of when I entered the bill. I could choose the ‘open date’ as the 
receipt date, but then I don’t have a place to put the actual bill date.

There is no way with GnuCash I can choose a proper posting date that puts the 
relevant expenses being realized in their appropriate periods or in the case of 
pre-payments shifting assets at the appropriate times.

The same can easily happen for invoicing customers. If I generate an invoice in 
December to a customer for work done in October and November, I can’t realize 
the appropriate revenue in each period. I can only choose one month or the 
other. (or more likely, December since that will be the posting date - which is 
entirely incorrect)

To fix this, I’d have to make correcting entries all over the place.

It seems to me, either there should be an option to post to a single date, post 
by line-item-date, or ALWAYS post by line-item date. (if they are all the same, 
then the posting date is all the same) I can see a complication with the 
‘Accumulate Splits?’ option, but the two could be tied together. Splits can 
either only be accumulated for common dates and accounts, or else accumulating 
splits results in a single posting date. (otherwise, each split posts to its 
line-item date)

Pre-paid expenses are a special case, but I should think it possible to address 
it with the business features somehow. I’ve thought of using special clearing 
accounts but I can’t seem to figure where they might go. Posting a bill for a 
pre-paid expense (but not yet actually paying it) produces a liability balanced 
by what exactly? You don’t yet have a new asset because you haven’t paid the 
bill yet. You don’t have an additional liability. You haven’t realized any 
income or expense and your equity position hasn’t changed. What should balance 
Liabilities:AP for an as yet un-paid pre-paid expense?

How is anyone else dealing with this?

Thoughts?

Am I missing something?

Regards,
Adrien

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Re: Mutual funds quote not working after moving to alphavantage

[Andrea Beddoni]

Thanks Richard,
I had already tried to use the Morningstar GB option (I have also tested
the other options listed, i.e. Trustnet) from the security editor but it
hadn't worked. Not sure why and how to fix it.

I wonder if it has anything to do with date. In my price editor I have
dd/mm/ while using gnc-fq-dump returns mm/dd/

Any help would be greatly appreciated

On 9 December 2017 at 19:28, Richard Ullger  wrote:

> On 09/12/17 18:23, Andrea Beddoni wrote:
> > Thanks for the suggestion. Two questions:
> > 1. How can I set mstaruk as a source in gnucash security editor? It
> > works if I run gnc-fq-dump mstaruk but I don't have it as a possible
> > source in gnucash
>
> You can find it in the 'Single' dropdown list of the 'Type of quote
> source' as 'Morningstar GB'
>
> > 2. The quotes I get running gnc-fq-dump mstaruk are for the 12/08/17. Is
> > this correct?
>
> Yes, that is Friday 8 Dec, the last day the market was open.
>
>


-- 
Kind Regards,

Andrea Beddoni


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Re: Mutual funds quote not working after moving to alphavantage

[Richard Ullger]

On 09/12/17 18:23, Andrea Beddoni wrote:
> Thanks for the suggestion. Two questions:
> 1. How can I set mstaruk as a source in gnucash security editor? It
> works if I run gnc-fq-dump mstaruk but I don't have it as a possible
> source in gnucash

You can find it in the 'Single' dropdown list of the 'Type of quote
source' as 'Morningstar GB'

> 2. The quotes I get running gnc-fq-dump mstaruk are for the 12/08/17. Is
> this correct?

Yes, that is Friday 8 Dec, the last day the market was open.



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Re: Mutual funds quote not working after moving to alphavantage

[Andrea Beddoni]

Thanks for the suggestion. Two questions:
1. How can I set mstaruk as a source in gnucash security editor? It works
if I run gnc-fq-dump mstaruk but I don't have it as a possible source in
gnucash
2. The quotes I get running gnc-fq-dump mstaruk are for the 12/08/17. Is
this correct?

Thanks for your help

On 9 December 2017 at 18:05, Richard Ullger  wrote:

> On 09/12/17 17:09, Andrea Beddoni wrote:
> > I have just switched to alphavantage on Gnucash 2.6.12 (Ubuntu 16.04)
> > The quotes for ETFs are retrieved (i.e. IGLS) even if with a value 1/100
> of
> > the actual (i.e 1.32 instead of 132), however the quotes for mutual funds
> > (i.e. GB00B4PQW151) are not retrieved.
> >
> > When trying to get the online quotes I get the message that Gnucash is
> > unable to retrieve quotes for all the funds
>
> Try mstaruk quote source for UK funds, except on a weekend when prices
> are 100 times too large (in pence).
>
> gnc-fq-dump mstaruk GB00B4PQW151
> Finance::Quote fields Gnucash uses:
> symbol: GB00B4PQW151 <=== required
>   date: 12/08/2017   <=== recommended
>   currency: GBP  <=== required
>   last: 190.12   <=\
>nav: 190.12   <=== one of these
>  price: 190.12   <=/
>   timezone:  <=== optional
>
> When downloaded during the week they are ok for use in gnucash (ie £1.9012)
>
>
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-- 
Kind Regards,

Andrea Beddoni


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Re: Mutual funds quote not working after moving to alphavantage

[Richard Ullger]

On 09/12/17 17:09, Andrea Beddoni wrote:
> I have just switched to alphavantage on Gnucash 2.6.12 (Ubuntu 16.04)
> The quotes for ETFs are retrieved (i.e. IGLS) even if with a value 1/100 of
> the actual (i.e 1.32 instead of 132), however the quotes for mutual funds
> (i.e. GB00B4PQW151) are not retrieved.
> 
> When trying to get the online quotes I get the message that Gnucash is
> unable to retrieve quotes for all the funds

Try mstaruk quote source for UK funds, except on a weekend when prices
are 100 times too large (in pence).

gnc-fq-dump mstaruk GB00B4PQW151
Finance::Quote fields Gnucash uses:
symbol: GB00B4PQW151 <=== required
  date: 12/08/2017   <=== recommended
  currency: GBP  <=== required
  last: 190.12   <=\
   nav: 190.12   <=== one of these
 price: 190.12   <=/
  timezone:  <=== optional

When downloaded during the week they are ok for use in gnucash (ie £1.9012)



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Mutual funds quote not working after moving to alphavantage

[Andrea Beddoni]

I have just switched to alphavantage on Gnucash 2.6.12 (Ubuntu 16.04)
The quotes for ETFs are retrieved (i.e. IGLS) even if with a value 1/100 of
the actual (i.e 1.32 instead of 132), however the quotes for mutual funds
(i.e. GB00B4PQW151) are not retrieved.

When trying to get the online quotes I get the message that Gnucash is
unable to retrieve quotes for all the funds

Any help on how to fix this would be greatly appreciated.

Thanks
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Re: GL Accounts

[Nith Valley Organics]

In our jurisdiction, we are permitted to use cash accounting (and there are tax 
advantages to doing so) for our line of business.

I still use the business features, putting through invoices even when payment 
is immediate (I’d like a “post & pay” shortcut, but I don’t know whether anyone 
else would…).

Having invoices gives me a nice easy way to track sales tax where appropriate, 
and lets me search for how much of X we sold to whomever.
Business features are useful in spite of the fact that I have to hack around 
the accrual accounting system at the end of the year.

> On Dec 8, 2017, at 7:57 PM, DaveC49  wrote:
> 
> Hi Maf,
> 
> Just a slight clarification on what accrual accounting means. 
> 
> The GAAP contains certain principles about when income is considered to be
> earned and when expenses are considered to be incurred and when they are to
> be recognized/recorded in the accounts. These are not necessarily coincident
> in time with the receipt of payments for income or the payment by you for an
> expenditure for reasons which may be unrelated to you offering or accepting
> payment under terms of credit.
> 
> In accrual accounting income is for example considered to be earned at the
> time when you perform the work that entitles you to receive that income even
> though you may not actually receive the payment until some time later (for
> example after submitting a report). 
> 
> Similarly you may incur an expenditure in accrual accounting terms at the
> time you enter into an agreement to purchase something, not necessarily when
> you actually make the payment. This can of course complicate the accounting
> and can be important in the tax accounting for many business. This is what
> defines accrual accounting.
> 
> Most tax jurisdictions allow use of a simplified form of accounting (usually
> under a specified turnover threshold and under other specified conditions)
> where you record in your accounts income at the time you receive the payment
> and expenditure at the time you make the payment. This is usually referred
> to as accounting on a cash basis or Cash Accounting.
> 
> The difference is in the timing of the recording of an event, e.g. the
> issuing of an invoice, and is not necessarily related to the use of A/R or
> A/P per se. 
> 
> These (A/R, A/P) relate specifically to a business providing credit to its
> customers under certain terms it specifies or accepting credit from its
> suppliers under the terms they specify and they can be used both with
> Accrual or Cash accounting. 
> 
> 
> David
> 
> 
> 
> -
> David Cousens
> --
> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
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