Re: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Mike or Penny Novack 

On 5/25/2017 11:49 AM, Maf. King wrote:

Copying to list...

On Thursday, 25 May 2017 16:33:39 BST you wrote:

Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC, YMMV
and HTH.


Side by side reports, etc.

I can't really advise you on that as I do not try to do that sort of 
thing from within gnucash. I could have written the special reports 
(this was long before gnucash offered that special stuff) as I was an 
experienced analyst, and while never paid to program in LISP, could get 
by in it so could have handled the SCHEME (essentially, a lisp dialect). 
But a very experienced accountant told me "don't bother, Mike. Just 
produce the separate raw reports, export them, then use your favorite 
editor to put it all together, adding annotations, fixed text*, pretty 
printing, etc. under control, of that full power editor. That's what any 
of us would do."


In other words, the raw reports and what I present to the board of 
directors not the same. To fill out forms for the government, etc. might 
require different levels of detail/grouping than the boards would want 
to see.


Michael

* Being "public charities", the books are "open". Not that anybody from 
the public has ever asked to see them. But the reports have to be such 
that they WOULD make sense if seen. Thus while the BoD's of each 
organization know the accounting principles/choices used and wouldn't 
need to see them each time, they are included as fixed text. Statements 
like "fixed assets are durables costing more than $500 and will be 
depreciated over four years" << so somebody reading the financial report 
would know that durables costing under $500 would have been immediately 
expensed >>  And any unusual amounts are annotated. Certain lines in the 
report could be larger font, bold, etc. So even if getting the report 
side by side out of gnucash, would STILL be using an editor before 
getting to the finished product.



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Re: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Mike or Penny Novack 

On 5/25/2017 11:05 AM, Anita Graves wrote:

I am astounded at the amount of help you dear people offer!  Thank you very 
much.

... My only reason for wanting to ‘close’ the books was in order to 
properly carry forward any account balances.  In my case, I had some advanced 
fund balances in the expenses as subaccounts and was hoping there would be a 
‘magical’ way to carry these balances forward, along with the balances forward 
in the asset, and equity accounts, but don’t think I know how to do that.

Stop right there.

I think you are mishandling how you are accounting for "dedicated 
donations" (what I would call "restricted donations"). Formally 
restricted donations are technically a liability, but you probably don't 
want to go there. And you probably don't have separate bank accounts for 
each fund. One (relatively) easy way to do this:


a) Make a parent for your bank account and make what is now your bank 
account a child of that, Then create child accounts for each special  
fund where the money is kept in your main bank account. You will be able 
to reconcile against the statements from your bank by looking at the 
parent total. You may have a little more work to do when entering a bank 
deposit if being new, you don't want to mess with transactions split on 
both sides (that's tricky). In that case, immediately after the deposit 
(split on the credit side) you enter a transaction to transfer that 
portion of the deposit that was restricted to the proper child(ren) so 
could be split debit  side.


b) Each time you pay an expense that qualifies for use of some 
restricted fund money you again have a little extra work. The actual 
check would be entered in the main bank account (debit the expense 
account) but also transfer back that amount from the restricted fund to 
the main account. Again, use two transactions if you find a two way 
split daunting.


c) The adjustments (transfers into and out of the restricted children) 
could be done periodically instead of as each happens. That is a "work 
flow" choice. In that case you would use the total for the period 
(quarter?) of "donations restricted building expenses" to transfer from 
main account to the "building expense fund" child and the period total 
of "building expenses" to transfer back from the "building expense fund" 
to main checking. use your judgement based on the volume of transactions.


This DOES carry over accounting periods since accounts of type asset, 
liability, and equity, are "standing" accounts.


Note that a Balance Sheet report will show your board what is the 
balance of each of these dedicated funds at any given point in time.


Michael


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Re: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Maf. King 
Copying to list...

On Thursday, 25 May 2017 16:33:39 BST you wrote:
> Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC, YMMV
> and HTH.

Mostly internet abbreviations.
If I Recall Correctly
Your Mileage Might Vary
Hope That Helps

> 
> How is it possible to keep the same file moving from one year to the next in
> the same file?  How can I turn over the accounts for one year only to an
> accountant?  How can you compare side by side if everything is in the same
> file?

My accountant doesn't want to see my GC file, he wants reports that give the 
profit & loss figures, balance sheet, account totals etc.  I do also do a full 
transaction report, but he doesn't do any data entry / editing, just the 
incorporating into the standard format for submission to the government.  Your 
auditing needs may of course be different. 

You can set the date range (or effective date for balance sheet / account 
summary etc) for pretty much any of the reports.  So you just run the report 
for say 2016 or may-august 2015 or whatever.  I find the transaction report to 
be surprisingly useful as a start point for many things.

There is also a multi-column report - which is a "container" for any other 
reports - so you can have say 3 balance sheets side-by-side, or run income 
year to date  subtotalled by month next to the same thing for last year, for 
example.

Maf.


> > On 25 May 2017, at 6:28 PM, Maf. King  wrote:
> > 
> > On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:
> >> I would very much like to know how these funds should be entered in the
> >> accounts.  You take money from the asset accounts (checking or cash) and
> >> put it in special ‘earmarked’ expense subaccounts, then draw the funds
> >> toward zero as they are spent, and the balances go forward from year to
> >> year, if that is the case.
> > 
> > Hi Anita,
> > 
> > I would record the earmarked contributions carried forward as Asset
> > accounts, not expense accounts.
> > 
> > IIRC, you have one bank account, but you have "imaginary" bank accounts to
> > restrict the funds within that bank account
> > 
> > I would have
> > Assets:Bank:Unrestricted
> > Assets:Bank:Restricted:National
> > Assets:Bank:Restricted:BuildingRepair
> > and so on.
> > 
> > In the chart of accoutns, you will be able to see the overall bank
> > balance,
> > and each register will show you how much is earmarked for repairs etc.
> > 
> > When you reconcile, check the box to "include sub-acccounts"
> > 
> > Donations are Income:Donation:MoreBreakdownIfYouNeedIt ->
> > Asset:Bank:Wherever
> > 
> > The only glitch is if you have a donor giving to 2 restricted funds at
> > once - it won't be clear in the reconcile dialogue box; it will show as 2
> > transactions that reconcile at the same time. (ie you tick one and the
> > 2nd is ticked automatically)
> > 
> > As you spend the restrictions, then you transfer from Asset:Bank: to
> > Expenses:
> > 
> > And I personally would not use new files year to year.  the reports can
> > handle the periods just fine - and it can be useful to compare 2 periods
> > side-by-side; you can't do that within GC if the data is split into
> > different files.
> > 
> > As ever, subject to local laws, customs & practices, which is beyond my
> > ken. YMMV etc.
> > 
> > HTH,
> > Maf.


-- 
Maf. King
PGP Key fingerprint = 8D68 A91F 733B 2C1F 43B7  2B7C E591 E8E1 0DE7 C542


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-- 
Maf. King
PGP Key fingerprint = 8D68 A91F 733B 2C1F 43B7  2B7C E591 E8E1 0DE7 C542



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Re: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Derek Atkins 

On Thu, May 25, 2017 11:33 am, Anita Graves wrote:
> Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC,
> YMMV and HTH.

If I Recall Corretly
Your Mileage May Vary
Happy To Help

> How is it possible to keep the same file moving from one year to the next
> in the same file?

Just keep entering data.

>   How can I turn over the accounts for one year only to
> an accountant?

This is certainly harder if your data file contains multiple years of
data.  If you want to supply a gnucash database file then you would need
to supply everything to your accountant.  Otherwise, you could generally
just submit an Income Statement, Balance Sheet, and a full transaction
report for the period.

>   How can you compare side by side if everything is in the
> same file?

Generate two reports, one for e.g. 1/1/2015-1/1/2016, and one for
1/1/2016-1/1/2017 and compare.

-derek

>
>> On 25 May 2017, at 6:28 PM, Maf. King  wrote:
>>
>> On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:
>>
>>>
>>> I would very much like to know how these funds should be entered in the
>>> accounts.  You take money from the asset accounts (checking or cash)
>>> and
>>> put it in special ‘earmarked’ expense subaccounts, then draw the funds
>>> toward zero as they are spent, and the balances go forward from year to
>>> year, if that is the case.
>>>
>>
>> Hi Anita,
>>
>> I would record the earmarked contributions carried forward as Asset
>> accounts,
>> not expense accounts.
>>
>> IIRC, you have one bank account, but you have "imaginary" bank accounts
>> to
>> restrict the funds within that bank account
>>
>> I would have
>> Assets:Bank:Unrestricted
>> Assets:Bank:Restricted:National
>> Assets:Bank:Restricted:BuildingRepair
>> and so on.
>>
>> In the chart of accoutns, you will be able to see the overall bank
>> balance,
>> and each register will show you how much is earmarked for repairs etc.
>>
>> When you reconcile, check the box to "include sub-acccounts"
>>
>> Donations are Income:Donation:MoreBreakdownIfYouNeedIt ->
>> Asset:Bank:Wherever
>>
>> The only glitch is if you have a donor giving to 2 restricted funds at
>> once -
>> it won't be clear in the reconcile dialogue box; it will show as 2
>> transactions that reconcile at the same time. (ie you tick one and the
>> 2nd is
>> ticked automatically)
>>
>> As you spend the restrictions, then you transfer from Asset:Bank: to
>> Expenses:
>>
>> And I personally would not use new files year to year.  the reports can
>> handle
>> the periods just fine - and it can be useful to compare 2 periods
>> side-by-side;
>> you can't do that within GC if the data is split into different files.
>>
>> As ever, subject to local laws, customs & practices, which is beyond my
>> ken.
>> YMMV etc.
>>
>> HTH,
>> Maf.
>>
>>
>
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Re: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Maf. King 
On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:

> 
> I would very much like to know how these funds should be entered in the
> accounts.  You take money from the asset accounts (checking or cash) and
> put it in special ‘earmarked’ expense subaccounts, then draw the funds
> toward zero as they are spent, and the balances go forward from year to
> year, if that is the case.
> 

Hi Anita,

I would record the earmarked contributions carried forward as Asset accounts, 
not expense accounts.

IIRC, you have one bank account, but you have "imaginary" bank accounts to 
restrict the funds within that bank account

I would have 
Assets:Bank:Unrestricted
Assets:Bank:Restricted:National
Assets:Bank:Restricted:BuildingRepair
and so on.

In the chart of accoutns, you will be able to see the overall bank balance, 
and each register will show you how much is earmarked for repairs etc.

When you reconcile, check the box to "include sub-acccounts"

Donations are Income:Donation:MoreBreakdownIfYouNeedIt -> Asset:Bank:Wherever

The only glitch is if you have a donor giving to 2 restricted funds at once - 
it won't be clear in the reconcile dialogue box; it will show as 2 
transactions that reconcile at the same time. (ie you tick one and the 2nd is 
ticked automatically)

As you spend the restrictions, then you transfer from Asset:Bank: to 
Expenses:

And I personally would not use new files year to year.  the reports can handle 
the periods just fine - and it can be useful to compare 2 periods side-by-side; 
you can't do that within GC if the data is split into different files.  

As ever, subject to local laws, customs & practices, which is beyond my ken. 
YMMV etc.

HTH,
Maf.


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Re: How to close a financial year

2017-05-25 Thread Mike or Penny Novack 

On 5/24/2017 10:56 PM, doncram wrote:
Thank you to David T. and to Michael D Novack and others for 
observations on closing.  Ideas from these and other comments that I 
can look for in past ("annual") discussions oughta be incorporated 
into documentation.  Some notes while this is fresh:






*Note freezing is not the same...the prior years data stays in your 
system, and if it is not frozen then errors can be introduced, you 
might accidentally add or change a prior year transaction.  In 
commercial standard accounting, the past data is locked by password at 
least, and prior year info is only changed in exceptional 
circumstances (explain those...and how even for public restatements of 
financials, the past info is likely not changed).


*I still am gathering that password-locking the past period data is 
not possible.


This is getting tiresome?

In ANY computerized system, "password locking" protects only against 
accidental changes to the data. It does not protect against malicious 
alteration by a person skilled in software. You underestimate the levels 
of protection necessary to lock out somebody who can get physical access 
to your machine << eg: can I interrupt the boot sequence and change the 
boot order so instead of coming up in the usual operating system the 
machine will boot from a different device and thus the operating system 
of my choice? >> This problem is much more severe in the case of "open 
software" where a far lower degree of skill is necessary to get around 
password protection. But some of us have the skills and tools to get 
around it even if not open software.


And since this began as a "close the books" discussion, whether prior 
period data remains in the (new period) books is your choice. When I 
discussed simply making read only copies and passing these out of the 
bookkeeper's control I was demonstrating a work flow that could provide 
proof* of alteration of prior data. Most people consider that enough, 
and would prefer to be able to look at prior data (in the current books) 
and not have to reload from a backup copy to do that. BUT, if that is 
what you want, after closing the books you can create the new set of 
books without prior data. That mimics the usual procedure of back in the 
days of pen and ink on paper in bound volumes, where new volumes were 
begun with the new accounting period. In other words, you are talking 
about "work flow" matters and not the application itself.


And no, backup instruction do not belong in application guides. On our 
computers, we have data created by lots of different applications. We 
need backup procedures that back up ALL of our data. So discussion of 
alternatives for backup belong in a "computer users" guide, not 
application by application. Our working backups these days are usually 
not on read only medium. But it wasn't that many years ago, before large 
external drives became cheap, that I was burning even these to read only 
DVD.


Michael

* Yes, I was sometimes called upon to do that, run byte by byte compares 
to demonstrate that something HAD been altered.

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Fwd: How to close a financial year & how to keep 'earmarked' funds

2017-05-25 Thread Anita Graves 


> Begin forwarded message:
> 
> From: Anita Graves <anitagra...@mac.com>
> Subject: Re: How to close a financial year & how to keep 'earmarked' funds
> Date: 25 May 2017 at 6:05:27 PM GMT+3
> To: Derek Atkins <warl...@mit.edu>
> Cc: doncram <donc...@gmail.com>, DaveC49 <davidcous...@bigpond.com>, 
> gnucash-user@gnucash.org
> 
> I am astounded at the amount of help you dear people offer!  Thank you very 
> much.
> 
> After glancing at all the replies, I have decided to back away from any idea 
> of ‘closing the file’ for the previous year.  I say this because a) I am a 
> novice at GnuCash and b) I have an accountant who will take a look at this 
> later on and hopefully help out.  My only reason for wanting to ‘close’ the 
> books was in order to properly carry forward any account balances.  In my 
> case, I had some advanced fund balances in the expenses as subaccounts and 
> was hoping there would be a ‘magical’ way to carry these balances forward, 
> along with the balances forward in the asset, and equity accounts, but don’t 
> think I know how to do that.  In the end, I just opened the same account tree 
> in a new file and manually put in these balances.  I need help to know how to 
> account for funds that are ‘earmarked’ (i.e., donated and contributed for 
> specific purposes and which are not necessarily spent in one year, but 
> carried forward, showing the expenses to draw them down as they occur, and 
> other transactions affecting each of these ‘earmarked’ funds, accordingly.
> 
> We are a religious organization, and an international one, so funds could be 
> contributed ‘earmarked’ for a) the national fund; b) the international fund; 
> c) repairs and maintenance of the meeting place; e) construction of a house 
> of worship, etc. 
> 
> I would very much like to know how these funds should be entered in the 
> accounts.  You take money from the asset accounts (checking or cash) and put 
> it in special ‘earmarked’ expense subaccounts, then draw the funds toward 
> zero as they are spent, and the balances go forward from year to year, if 
> that is the case.
> 
> Can anyone tell me how to do this?  I am in Cyprus, and we are a corporate 
> entity, a limited company, not non-profit, not charitable.  We have no 
> experience with taxes because our contributions are so small and no one has 
> ever expressed a need to have their contributions exempted from taxation.
> 
> Thanks to anyone who can help me on this
>> On 25 May 2017, at 5:50 PM, Derek Atkins <warl...@mit.edu> wrote:
>> 
>> doncram <donc...@gmail.com> writes:
>> 
>>> The advice to Anita to close a year's books, with warning present in the
>>> that doing so will destroy usability of reports henceforth, is quite
>>> alarming!  What is meant by "closing" in GnuCash-jargon seems different
>>> than what is meant more usually in accounting.
>> 
>> AFAIK all the reports properly handle the Close Books tool.
>> 
>>> In an entirely manual accounting, closing the books at the end of year or
>>> other period involves several steps:
>>> 1. Recognize accruals (non-cash entries) such as:
>>> **depreciation
>>> **allowance for bad debt (uncollectible accounts)
>>> **accrue payroll liabilities (assuming payroll date was not at the end of
>>> year, some liability of salaries and benefits needs to be accrued
>>> **accrue tax liabilities
>>> **other adjusting entries (to adjust assets and liabilities)
>>> 2. Make journal entries transferring expense and revenue account balances
>>> to income statement summary accounts, i.e. generating an income statement
>>> 3. Close the income statement summary accounts to retained earnings
>>> 4. Freezing forever the accounts for the period (in software, this would be
>>> done by putting a lock on any transactions before the new period)
>>> 
>>> I am guessing that GnuCash does not support #4.
>>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>>> income statement report already exists.  And if they are done anyhow then
>>> usability of reports will be destroyed.  A user wants to be able to
>>> generate reports from prior years, e.g. for making comparisons.
>>> About #1, advising Anita how to proceed would require some more information
>>> on what the current balance sheet shows and what assets and liabilities
>>> need to be updated.
>> 
>> The current tool just rolls up all the Income and Expense accounts into
>> Equity, basically zero-izing the Income and Expense accounts in the CoA
>> for the new period

Re: How to close a financial year

2017-05-25 Thread Derek Atkins 
doncram  writes:

> The advice to Anita to close a year's books, with warning present in the
> that doing so will destroy usability of reports henceforth, is quite
> alarming!  What is meant by "closing" in GnuCash-jargon seems different
> than what is meant more usually in accounting.

AFAIK all the reports properly handle the Close Books tool.

> In an entirely manual accounting, closing the books at the end of year or
> other period involves several steps:
> 1. Recognize accruals (non-cash entries) such as:
> **depreciation
> **allowance for bad debt (uncollectible accounts)
> **accrue payroll liabilities (assuming payroll date was not at the end of
> year, some liability of salaries and benefits needs to be accrued
> **accrue tax liabilities
> **other adjusting entries (to adjust assets and liabilities)
> 2. Make journal entries transferring expense and revenue account balances
> to income statement summary accounts, i.e. generating an income statement
> 3. Close the income statement summary accounts to retained earnings
> 4. Freezing forever the accounts for the period (in software, this would be
> done by putting a lock on any transactions before the new period)
>
> I am guessing that GnuCash does not support #4.
> I gather that in GnuCash, #2 and #3 don't need to be done, because the
> income statement report already exists.  And if they are done anyhow then
> usability of reports will be destroyed.  A user wants to be able to
> generate reports from prior years, e.g. for making comparisons.
> About #1, advising Anita how to proceed would require some more information
> on what the current balance sheet shows and what assets and liabilities
> need to be updated.

The current tool just rolls up all the Income and Expense accounts into
Equity, basically zero-izing the Income and Expense accounts in the CoA
for the new period.  That's all it does.  It's useful if you want your
Income/Expense CoA balances to show the "current period" balance instead
of "since inception" balances.  And no, it's not required because all
the reports will properly deal with the behavior with or without closing
the books.

You're correct that GnuCash does not support #4, and indeed no piece of
software with a writeable database can.  Those that claim to do so are
lying; what they mean is that you cannot do it through the UI, but that
doesn't mean you cannot do it.

> Anita, does this begin to help?  And could anyone else clarify?  I
> personally am willing to help update the GnuCash documentation about
> closing, as this is important!
>
> cheers, Don

> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

-derek

-- 
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Re: How to close a financial year

2017-05-25 Thread Liz 
On Wed, 24 May 2017 22:56:25 -0400
doncram  wrote:

> *I still am gathering that password-locking the past period data is
> not possible.

It is 'possible', but its a naive sort of lock. It looks good, but the
problem is that it is open to hacking. Mike Novack has made annual
posts on that topic too.

I do my write protected backup each year. I burn to CD-ROM and hand it
to the accountant.

Liz
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Re: How to close a financial year

2017-05-24 Thread David T. via gnucash-user 
Don, 
Your contributions will be welcome. As I do not close my books, and also do not 
use the business features, I can only offer you editorial guidance and general 
help in the process. 
As for the term "Chart of Accounts", Gnucash uses this term for the page that 
displays all accounts in a hierarchical tree, i.e., the first summary page when 
you open a file. This page in Gnucash includes balances, although it is 
configurable. This is noted in the glossary, although the definition might be 
improved to explain Gnucash's spin on the term. 

As stated elsewhere, the wiki is not the same as the documentation, and this is 
intentional. The docs are more formal, whereas the wiki is more immediate. In 
the past, information has tended to gravitate in one place or the other, and 
once there, stays there. If your goal is to improve the docs (which I endorse), 
I think you should file a bug and work through that mechanism, rather than put 
stuff into the wiki that you intend to place in the docs. 
David
 
 
  On Thu, May 25, 2017 at 7:57, doncram wrote:   Thank you 
to David T. and to Michael D Novack and others for observations
on closing.  Ideas from these and other comments that I can look for in
past ("annual") discussions oughta be incorporated into documentation.
Some notes while this is fresh:

*Annual discussions, true "frequently asked questions" --> opportunity to
improve documentation

*The Tutorial and Concept Guide does not address closing at all, if I am
not mistaken...it should be covered in Chapter 13 about businesses and it
also should be covered in closing for personal finances

*The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
alarming to me in the difference of its terminology from that of
introductory accounting textbook treatment of the topic...it suggests the
purpose of closing is to zero out account balances or to "zero
transactions". I need to review textbook treatment myself, but what's
needed in explanation to regular users is a discussion of all the usual
aspects, starting with making adjusting entries -- a huge theme in chapter
after chapter of textbooks (e.g. recognize accrued interest in mortgages,
loan & bond liabilities and assets, for one i didn't mention yet).  Provide
example journal entries of each type.

*Then go through discussion of all the logical steps of closing in a manual
system or in big commercial accounting software, and how you can
approximate that in GnuCash (e.g., as suggested, make a point of backing up
the data and securely storing/distributing it).

*Note freezing is not the same...the prior years data stays in your system,
and if it is not frozen then errors can be introduced, you might
accidentally add or change a prior year transaction.  In commercial
standard accounting, the past data is locked by password at least, and
prior year info is only changed in exceptional circumstances (explain
those...and how even for public restatements of financials, the past info
is likely not changed).

*I still am gathering that password-locking the past period data is not
possible.

*Both the Wiki and the Help coverage use incorrect-to-my-ears language
about the Chart of Accounts, both saying that the Chart of Accounts will
show amounts of some kind.  GnuCash usage should be brought into conformity
with accounting usage where the Chart of Accounts is a list of the account
names and account numbers and account types only;  it does not have any
dollar amounts.  The GnuCash usage is referring to what I would call Trial
Balances i think.

*What is the goal in closing?  I think it is about bringing the state of
financial reporting into a "good state", e.g. where the Balance Sheet and
the Income Statement/Statement of Revenues and Expenses are accurate in
accordance with your organization's or your personal accounting standards,
perhaps U.S. Generally Accepted Accounting Principles perhaps with
modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
is cash basis.  What your nonprofit's board or independent accountant will
likely accept.  An individual may want their accounting to match tax filing
(close but not same as cash basis), e.g. use depreciation per tax standards
rather than GAAP, which is a choice.  The goal could be to accurately
state your income as will match on tax forms.  A number of adjusting
entries are needed, and once a year perhaps is good for considering
revaluations of property, etc.  Side note: for U.S. personal taxes if you
deduct car usage for personal business usage according to mileage at
allowable rate, that means that you need to make an accrual, an adjustment,
relating to difference between that vs. your "actual" car expenses.  The
Tutorial and Concept Guide treatment should start with the goal(s) you can
have.

I gather I should submit a bug through Bugzilla to address changes for the
Manual and changes for the Tutorial and Concept Guide. Presumably I could
just edit the Wiki section

Re: How to close a financial year

2017-05-24 Thread Adrien Monteleone 

> On May 24, 2017, at 9:56 PM, doncram  wrote:
> 
> Thank you to David T. and to Michael D Novack and others for observations
> on closing.  Ideas from these and other comments that I can look for in
> past ("annual") discussions oughta be incorporated into documentation.
> Some notes while this is fresh:
> 
> *Annual discussions, true "frequently asked questions" --> opportunity to
> improve documentation
> 
> *The Tutorial and Concept Guide does not address closing at all, if I am
> not mistaken...it should be covered in Chapter 13 about businesses and it
> also should be covered in closing for personal finances
> 
> *The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
> alarming to me in the difference of its terminology from that of
> introductory accounting textbook treatment of the topic...it suggests the
> purpose of closing is to zero out account balances or to "zero
> transactions". I need to review textbook treatment myself, but what's
> needed in explanation to regular users is a discussion of all the usual
> aspects, starting with making adjusting entries -- a huge theme in chapter
> after chapter of textbooks (e.g. recognize accrued interest in mortgages,
> loan & bond liabilities and assets, for one i didn't mention yet).  Provide
> example journal entries of each type.
> 
> *Then go through discussion of all the logical steps of closing in a manual
> system or in big commercial accounting software, and how you can
> approximate that in GnuCash (e.g., as suggested, make a point of backing up
> the data and securely storing/distributing it).
> 
> *Note freezing is not the same...the prior years data stays in your system,
> and if it is not frozen then errors can be introduced, you might
> accidentally add or change a prior year transaction.  In commercial
> standard accounting, the past data is locked by password at least, and
> prior year info is only changed in exceptional circumstances (explain
> those...and how even for public restatements of financials, the past info
> is likely not changed).
> 
> *I still am gathering that password-locking the past period data is not
> possible.
> 
> *Both the Wiki and the Help coverage use incorrect-to-my-ears language
> about the Chart of Accounts, both saying that the Chart of Accounts will
> show amounts of some kind.  GnuCash usage should be brought into conformity
> with accounting usage where the Chart of Accounts is a list of the account
> names and account numbers and account types only;  it does not have any
> dollar amounts.  The GnuCash usage is referring to what I would call Trial
> Balances i think.

I think the way the Chart of Accounts is currently presented could be very 
useful. It is helpful to see at a glance what the current balance of any 
particular account is without opening its register. This has no direct paper 
analogy, nor does it need to. If the idea is to live within the limitations of 
paper books, then just use paper books.

The CoA could be MORE useful if the expense and income accounts had the option 
to be set as ‘current accounting period’ or something similar. Having them set 
to whatever arbitrary (or not) opening date in history is certainly less 
meaningful, at least for me. Now for assets and liabilities, a current balance 
from the beginning of the book IS useful as a trial balance sheet would be.

I use another application for a business that takes the approach you described 
for its chart of accounts. Pretty pointless and much less functional in my 
opinion. It was a set once and forget it sort of thing. The GnuCash approach 
has much more utility.

The way I think of it, the Accounts tab serves the function of a Chart of 
Accounts, but it was intended and is so much more. Is there really a need to 
have a separate, otherwise information only, non-functioning list of accounts? 
How is that an improvement or a benefit?

Just my 2¢,

Adrien

> 
> *What is the goal in closing?  I think it is about bringing the state of
> financial reporting into a "good state", e.g. where the Balance Sheet and
> the Income Statement/Statement of Revenues and Expenses are accurate in
> accordance with your organization's or your personal accounting standards,
> perhaps U.S. Generally Accepted Accounting Principles perhaps with
> modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
> is cash basis.  What your nonprofit's board or independent accountant will
> likely accept.  An individual may want their accounting to match tax filing
> (close but not same as cash basis), e.g. use depreciation per tax standards
> rather than GAAP, which is a choice.   The goal could be to accurately
> state your income as will match on tax forms.  A number of adjusting
> entries are needed, and once a year perhaps is good for considering
> revaluations of property, etc.  Side note: for U.S. personal taxes if you
> deduct car usage for personal business usage according to mileage at
>

Re: How to close a financial year

2017-05-24 Thread doncram 
Thank you to David T. and to Michael D Novack and others for observations
on closing.  Ideas from these and other comments that I can look for in
past ("annual") discussions oughta be incorporated into documentation.
Some notes while this is fresh:

*Annual discussions, true "frequently asked questions" --> opportunity to
improve documentation

*The Tutorial and Concept Guide does not address closing at all, if I am
not mistaken...it should be covered in Chapter 13 about businesses and it
also should be covered in closing for personal finances

*The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
alarming to me in the difference of its terminology from that of
introductory accounting textbook treatment of the topic...it suggests the
purpose of closing is to zero out account balances or to "zero
transactions". I need to review textbook treatment myself, but what's
needed in explanation to regular users is a discussion of all the usual
aspects, starting with making adjusting entries -- a huge theme in chapter
after chapter of textbooks (e.g. recognize accrued interest in mortgages,
loan & bond liabilities and assets, for one i didn't mention yet).  Provide
example journal entries of each type.

*Then go through discussion of all the logical steps of closing in a manual
system or in big commercial accounting software, and how you can
approximate that in GnuCash (e.g., as suggested, make a point of backing up
the data and securely storing/distributing it).

*Note freezing is not the same...the prior years data stays in your system,
and if it is not frozen then errors can be introduced, you might
accidentally add or change a prior year transaction.  In commercial
standard accounting, the past data is locked by password at least, and
prior year info is only changed in exceptional circumstances (explain
those...and how even for public restatements of financials, the past info
is likely not changed).

*I still am gathering that password-locking the past period data is not
possible.

*Both the Wiki and the Help coverage use incorrect-to-my-ears language
about the Chart of Accounts, both saying that the Chart of Accounts will
show amounts of some kind.  GnuCash usage should be brought into conformity
with accounting usage where the Chart of Accounts is a list of the account
names and account numbers and account types only;  it does not have any
dollar amounts.  The GnuCash usage is referring to what I would call Trial
Balances i think.

*What is the goal in closing?  I think it is about bringing the state of
financial reporting into a "good state", e.g. where the Balance Sheet and
the Income Statement/Statement of Revenues and Expenses are accurate in
accordance with your organization's or your personal accounting standards,
perhaps U.S. Generally Accepted Accounting Principles perhaps with
modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
is cash basis.  What your nonprofit's board or independent accountant will
likely accept.  An individual may want their accounting to match tax filing
(close but not same as cash basis), e.g. use depreciation per tax standards
rather than GAAP, which is a choice.   The goal could be to accurately
state your income as will match on tax forms.  A number of adjusting
entries are needed, and once a year perhaps is good for considering
revaluations of property, etc.  Side note: for U.S. personal taxes if you
deduct car usage for personal business usage according to mileage at
allowable rate, that means that you need to make an accrual, an adjustment,
relating to difference between that vs. your "actual" car expenses.  The
Tutorial and Concept Guide treatment should start with the goal(s) you can
have.

I gather I should submit a bug through Bugzilla to address changes for the
Manual and changes for the Tutorial and Concept Guide. Presumably I could
just edit the Wiki section directly.  I don't yet understand how the Wiki
is supposed to relate to the other documentation. Maybe the Wiki is to
cover stuff not yet in the "formal" documentation (the Manual and the
Guide, which are harder to change)?  --cheers, Don



On Wed, May 24, 2017 at 3:01 PM, Mike or Penny Novack <
stepbystepf...@dialup4less.com> wrote:

> On 5/24/2017 10:46 AM, doncram wrote:
>
>>   ...  What is meant by "closing" in GnuCash-jargon seems different
>> than what is meant more usually in accounting.
>> I
>> 4. Freezing forever the accounts for the period (in software, this would
>> be
>> done by putting a lock on any transactions before the new period)
>>
>> I am guessing that GnuCash does not support #4.
>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>> income statement report already exists.
>>
> a) The intermediate steps once used in pen and ink on paper accounting are
> indeed redundant and can be skipped
>
> b) No, #4 is EASY. Your confusion is in forgetting that in old fashioned
> pen and ink on paper accounting this was done by

Re: How to close a financial year

2017-05-22 Thread DaveC49 
Anita

The Wiki has a secion discussing it at 

https://wiki.gnucash.org/wiki/Closing_Books

and the documentation tells you how to use the built in routine for it at

https://www.gnucash.org/docs/v2.6/C/gnucash-help/tool-close-book.html

David Cousens



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View this message in context: 
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Re: How to close a financial year

2017-05-16 Thread Colin Law 
On 16 May 2017 at 10:53, David T. via gnucash-user
 wrote:
> Anita,
> This is discussed pretty much every year on the list. Try googling "close 
> books gnucash site:lists.gnucash.org". You should find plenty of reading.

Also note that there may be no need for you to close the books at all.
The reports allow data over a selected time span to be viewed so you
can see what has happened in the year without closing them.

Colin
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How to close a financial year

2017-05-16 Thread Anita Graves 
Dear Friends,  How does one close the file for one financial year and open a 
new one with the same account tree for the next financial year.

I am not sure where in the manual these things will be covered.  I managed to 
export my account tree but don’t know how to turn around and import it in a new 
file. I can’t get a blank database.

Also, when once you have closed the file for a certain financial year, can you 
still create/generate reports from that year’s file?

Thanks so much for the pointers and help!

Anita
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