Long, I think you are misunderstanding. Cash flow is a different concept from making provision for liabilities which will arise in the future. Having done the latter may however help ensure that your cash flow in the future is sufficient to meet your liabilities in the future. It is complicated further because we don't initially know how much you know about accounting and what it is you are really using GnuCash for.
Liabilities are not virtual accounts, they reflect real events which have either occurred or will occur as a result of a current event. In this case the current event is the earning of income which creates a liability to pay tax which you will have to pay at a future time. Your income is not earned at one point of time but may be paid to you weekly, fortnightly, monthly etc., so your liability to pay tax accrues as you pay income. You do not actually pay the tax at this time, just recognize in your accounts that you will have to at the end of the year and estimate how much. If your personal affairs are fairly simple you may have a good idea of how much tax you will pay so recording the liability may not be necessary for you. But if you are an investor with many complex transactions, knowing how much you will owe when the taxman comes calling may be much more difficult to estimate and the above recording may become a necessary evil. Only you can decide what you need based on your circumstances. We can only advise you on how you can do it and specifcally how you can do it with GnuCash not whether you should or not. There are a number of basic principles in accounting practice that underly what is known as accrual accounting associated with recognition of income when it is earned, matching expenses to income and the timing of events. Another principle is prudence which translates as making sure you have the cash available when it is needed. Cash accounting on the other hand only recognizes income when you receive it and expenses when you pay them. You will need to decide which is more appropriate for your purpose. Most legal jurisdictions will allow you to use cash accounting for business purposes under a specified threshold of income or turnover and it is generally sufficient for most personal accounting that does not involve business transactions. Many businesses are however required to use accrual accounting. The https://www.gnucash.org/docs/v3/C/gnucash-guide/index.html explains some of this in a fairly condensed form. A textbook on Financial Accounting may also help if you are not familiar with the terminology. As with most professions accounting has very specific meanings for commonly used words which may have a different meaning to their meaning in everyday use by the public. David ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.