Re: [GNC] Cash Basis Accounting

[Michael or Penny Novack]

Michael,

I have a sole professional services consulting practice, B2B, with 
clients.
No product sales. My approach to cash accounting has worked for me for 
more

than two decades; it might not work as well for others.

Regards,

Rich 


I understood what you were doing worked for you. I was simply pointing 
out that for people with a business like yours (no "sales"), using the 
"adjusting transactions" method, accrual to cash and back again would 
not be onerous. It can, of course, be onerous for those whose business 
involves "sales" because then there are likely many accounts whose cash 
balance is required to fill in line items for tax reporting, etc. You 
would not have that problem.


I was also wanting to point out that gnucash can be used JUST to produce 
invoices and track which paid using a separate set of books (on the 
accrual basis) even though the main books are cash basis. In other 
words, no need for a different (non-gnucash) application to do that. 
There are other situations where (additional) sets of virtual books can 
be useful to provide information, especially when major parts of one's 
economic activity is virtual.


Michael D Novack


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Re: [GNC] Cash Basis Accounting

[Rich Shepard]

On Thu, 6 Jan 2022, Michael or Penny Novack wrote:


But somebody who like Rich is invoicing "clients" is perhaps not doing
sales but a service and only needs "income from clients" on a cash basis.
Could do that by having a contra account (usually zero) with a name like
"client income not yet received". Then a single adjusting before (balance
of AR to "not yet received" and a single after ("not yet received to" AR)
should do the trick.


Michael,

I have a sole professional services consulting practice, B2B, with clients.
No product sales. My approach to cash accounting has worked for me for more
than two decades; it might not work as well for others.

Regards,

Rich
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Re: [GNC] Cash Basis Accounting

[Michael or Penny Novack]

On 1/6/2022 3:02 PM, Rich Shepard wrote:

On Thu, 6 Jan 2022, R. Victor Klassen wrote:


The only problem being if you want to send the invoice to your customer,
it says “invoice in progress”.


Since I don't use GC to prepare client invoices it's not an issue for 
me. I
use LaTeX for invoices. 


But somebody who like Rich is invoicing "clients" is perhaps not doing 
sales but a service and only needs "income from clients" on a cash 
basis. Could do that by having a contra account (usually zero) with a 
name like "client income not yet received". Then a single adjusting 
before (balance of AR to "not yet received" and a single after ("not yet 
received to" AR) should do the trick.


Michael D Novack

PS -- Or somebody who wants to produce invoices to send to customers but 
is on a cash basis COULD still use gnucash for that. Simply another set 
of books used JUST for producing the invoices.



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Re: [GNC] Cash Basis Accounting

[Rich Shepard]

On Thu, 6 Jan 2022, R. Victor Klassen wrote:


The only problem being if you want to send the invoice to your customer,
it says “invoice in progress”.


Since I don't use GC to prepare client invoices it's not an issue for me. I
use LaTeX for invoices.

Rich
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Re: [GNC] Cash Basis Accounting

[R. Victor Klassen]

The only problem being if you want to send the invoice to your customer, it 
says “invoice in progress”.

So I do find myself posting, printing, unposting (only around the end of the 
year) and re-posting as necessary.

> On Jan 6, 2022, at 9:50 AM, Don Gray  wrote:
> 
> Rich and Victor,
> 
>> What I do, on the advice of my previous accountant who's now retired, is not 
>> to enter an A/P or A/R invoice until payment is made or received, 
>> respectively. That way what you see is what you have. 
> Simple solution - I unposted the invoices which removed them from the 
> Profit/Loss statement.
> 
> In the future I'll not post invoices until I receive payment.
> 
> Thank you!
> 
> 
> Don Gray
> Exploring Human Systems in Action
> +1(336)414-4645
> 
> Tomorrow belongs to those who can hear it coming. - David Bowie 
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Re: [GNC] Cash Basis Accounting

[Don Gray]

Rich and Victor,

> What I do, on the advice of my previous accountant who's now retired, is not 
> to enter an A/P or A/R invoice until payment is made or received, 
> respectively. That way what you see is what you have. 
Simple solution - I unposted the invoices which removed them from the 
Profit/Loss statement.

In the future I'll not post invoices until I receive payment.

Thank you!


Don Gray
Exploring Human Systems in Action
+1(336)414-4645

Tomorrow belongs to those who can hear it coming. - David Bowie 
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Re: [GNC] Cash Basis Accounting

[Rich Shepard]

On Tue, 4 Jan 2022, Don Gray wrote:


The problem stems from the report being off by several thousand dollars as
I’ve posted invoices but not received the payments.


Don,

What I do, on the advice of my previous accountant who's now retired, is not
to enter an A/P or A/R invoice until payment is made or received,
respectively. That way what you see is what you have.

In your case, I'd delete the accrual transactions until you receive the
payments.

HTH,

Rich
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Re: [GNC] Cash Basis Accounting

[R. Victor Klassen]

I normally re-post invoices to the 1st of the year if not paid before, and any 
bills that are due and paid after the year end I also post to the 1st.  
Rarely do I find something that needs to be moved the other direction (although 
it is possible, I just can’t think of an instance off hand).

The date opened and the dates on the entries of the invoices/bills can still 
remain attached to reality, only the posting dates need to be fiddled with.

The method in the wiki works if you are really good at keeping A/P and A/R 
correct and up to date.  i.e. never receive payment without assigning it to an 
invoice
or properly categorizing the split, and never pay a bill without linking the 
payment to the bill.  In an ideal world that works all the time. Just not in my 
experience.

> On Jan 4, 2022, at 5:23 PM, Don Gray  wrote:
> 
> For 2021 year end account I need to generate a profit/loss report. No problem 
> as a standard report exists.
> 
> The problem stems from the report being off by several thousand dollars as 
> I’ve posted invoices but not received the payments.
> 
> Searching the internet I found 
> https://wiki.gnucash.org/wiki/Cash_Based_Accounting 
> . Is this still the 
> current way of handling Cash basis accounting?
> 
> Don
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[GNC] Cash Basis Accounting

[Don Gray]

For 2021 year end account I need to generate a profit/loss report. No problem 
as a standard report exists.

The problem stems from the report being off by several thousand dollars as I’ve 
posted invoices but not received the payments.

Searching the internet I found 
https://wiki.gnucash.org/wiki/Cash_Based_Accounting 
. Is this still the 
current way of handling Cash basis accounting?

Don
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