Re: [GNC] When closing books, equity statement report is incorrect
On Wed, Jan 3, 2024 at 11:25 AM Adrien Monteleone < adrien.montele...@lusfiber.net> wrote: > Isn't that how it would be done using Pen & Ink anyway? > > GnuCash has some features to make a few routine tasks easier, but it > should not get in your way from doing something via normal processes. > When doing your books you don't technically need a contra account for every little thing. GnuCash just gets in the way of your work if you don't have one, in this particular scenario. So, problem solved. Use a contra account. ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Wed, Jan 3, 2024, 09:13 Michael or Penny Novack < stepbystepf...@comcast.net> wrote: > Although I am NOT "qualified" to give advice I will give one example > related to the above to show not free to do just any old thing. If keeping > books for a corporation, as soon as the Directors declare a dividend, it > becomes a liability. > > BTW, I disagree things like "how to keep books for a corporation" belongs > in a gnucash wiki. We are NOT "qualified" to be giving this sort of > accounting advice. And in any case, these things can vary somewhat by > jurisdiction. > You already give advice on how to keep books on the wiki. There is an entire page telling people you don't need to close your books in GnuCash that proceeds to give people workarounds for how to do some of the things closing your books accomplishes. Adding this workflow isn't accounting advice, and frankly people are way beyond that. Even if this was accounting advice, at least it would be correct under GAAP and IFRS unlike the explicit advice that retained earnings are the same as net income or the implied advice that retained earnings belong on a sole proprietor's or partnership's balance sheet. I have no idea what your first quoted remark is in regards to. Yes, a dividend payable increases liabilities. An already-paid dividend does not. It reduces the previously -increased liability and reduces retained earnings (that thing people here claim is the same as net income.) Nothing I mentioned conflicts with that workflow in GnuCash or outside of GnuCash. I know of no jurisdictions that say the two facts are non-facts. These are 101 concepts used globally. On the flip side, the workflow people keep recommending on the wiki and mailing list does conflict. You have to keep a paid dividend on your books as a payable liability forever, put it on your books as an expense (to fraudulently reduce equity and reducing net income), or just never declare one. Do that and see how quick taxing authorities, lenders, or investors call foul. > ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Tue, Jan 2, 2024, 10:43 Michael or Penny Novack < stepbystepf...@comcast.net> wrote: > Other than the suitability/unsuitability gnucash provided "tool" for > closing the books this isn't really a gnucash question. > I've identified a solution for this issue that does not require a custom report. Sweep revenues and expenses into a Retained Earnings account and do not include it in the equity report. Take dividends / distributions out of a subaccount called Dividends / Distributions declared and do include it in the equity report. Put investments into an account (e.g. Common Stock) that is included in the report as usual. If people think this kind of thing is out of scope, feature creep, outmoded, etc., ok. If you want to give people a way to get their work done that doesn't involve changing the way GnuCash works, I'd get this workflow on the wiki so people have the option in their toolkit. > ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 10:28 PM Quinn Wood wrote: > On Sun, Oct 22, 2023 at 5:11 PM David Cousens > wrote: > >> Have you investigated customizing the reports for the particular >> situation and >> renaming the report sections to meet your needs. The Edit->Report Options >> alows >> selecting particular accounts, date ranges etc but modifying the report >> code >> (Scheme) allows you to customize them to whatever you want with regard to >> heading names etc. Requires an invetment to learn to program in Scheme >> though. >> > > I was planning to start from the current Equity Report, since I think I > see where it is calculating withdrawals and investments. I have to figure > out what the Scheme does to see if it can use the already-present "Closing > Entries pattern" option. > I've taken a look at creating this new equity report (that defines retained earnings as a snapshot of all accumulated net income kept by the business, when it could have been paid to owners instead) a few times but I don't have a complete answer. I *think* I could start creating the desired report by collecting four things: * what the total equity was before the report start date * what the total equity was on the report end date * what the total revenues were between the start and end date * what the total expenses were between the start and end date then populating some of the report fields * starting equity * ending equity * change in equity * net gain or loss I see some comments here and there about a form of metadata that hints at a journal entry being a closing entry. Is this metadata something that can be used in reports? My reading suggests it can't, but I don't have much to go on. ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 5:11 PM David Cousens wrote: > Have you investigated customizing the reports for the particular situation > and > renaming the report sections to meet your needs. The Edit->Report Options > alows > selecting particular accounts, date ranges etc but modifying the report > code > (Scheme) allows you to customize them to whatever you want with regard to > heading names etc. Requires an invetment to learn to program in Scheme > though. > I was planning to start from the current Equity Report, since I think I see where it is calculating withdrawals and investments. I have to figure out what the Scheme does to see if it can use the already-present "Closing Entries pattern" option. ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 3:56 PM Stan Brown (using GC 4.14) < stan...@fastmail.fm> wrote: > On 2023-10-22 12:55, Quinn Wood wrote: > > The only use case where retained earnings comes into play is when > > performing bookkeeping for a business that is taxed separately from its > > owners. > > I don't think that's right. > > (1) I was on the Board of a 501(c)(3) tax-exempt charity, and we had > retained earnings. They were the excess of income over expenses for the > year to date. > > (2) I have retained earnings -- again, the excess of income over > expenses for year to date. Part of that is gains and losses on > investments, both realized and unrealized. It would never occur to me to > call that "discretionary spending money", _especially_ the unrealized > gains. > 501(c)(3) organizations are still [non-profit] corporations, and non-profit corporations that have taxable income (maybe they don't have tax-exempt status, maybe they've generated some income from activity that doesn't fall under a tax-exempt umbrella) are taxed independently of anyone else. The terminology is a bit different in a number of places on a non-profit's documents, for example the non-profit doesn't have owners so there's no such thing as "owner's equity," but the core principle here is the same. If I were a lender, I would expect to see the term "net assets" instead of "retained earnings" on a balance sheet for a non-profit whether it's tax-exempt or not, I would expect to see the term "net worth" rather than "retained earnings" in the case of a natural person. My objective isn't to be pedantic for no reason, but to illustrate the distinctions when communicating financial state, which is what financial accounting is all about. To summarize, "retained earnings" in the strictest sense is income after expenses that has been OPTIONALLY kept by the business instead of passed to the business' owners. In the case of a non-profit or a natural person, it wouldn't really be classified as retained earnings, because there's no option not to retain it. Sole proprietorships, partnerships, and disregarded entities are in the opposite situation — there's no option not to pass it on to business owners. ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 1:42 PM Adrien Monteleone < adrien.montele...@lusfiber.net> wrote: > From the GnuCash website: > > "GnuCash is personal and small-business financial-accounting software..." > I will note that "small" in terms of revenue, assets, staff, or owners is arbitrary, so I'll focus on trying to extract the intended meaning behind "small business." Neither sole proprietorships, partnerships, nor disregarded entities have the ability to retain earnings. (Households don't really use the phrase "retained earnings" while doing their own bookkeeping either, they'd probably call it something like "discretionary spending money.") The only use case where retained earnings comes into play is when performing bookkeeping for a business that is taxed separately from its owners. This could be a single-owner LLC that has elected to be taxed as a corporation or a multinational public corporation that has elected to be taxed as a corporation. Jurisdictions outside the US may have dissimilar approaches to financial accounting, but I can't comment on them due to lack of familiarity. It seems to me the most straightforward way for businesses that can retain earnings to use GnuCash to track retained earnings and profit passed on to owners is to * close books (manually or using the built-in tool based on which method they prefer), and * use a "changes in equity" report that correctly disregards closing entries and/or journal entries that shouldn't be interpreted as investments or withdrawals of capital The answer to my original question is that the existing Equity Statement report doesn't achieve what I'm going after. I don't have much experience with reports, but I want to try my hand at creating one that does. ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 12:56 PM Adrien Monteleone < adrien.montele...@lusfiber.net> wrote: > First, your use case might be out of scope for GnuCash. > Could you clarify what you believe the use case is, and what you believe in-scope use of the software would be? ___ 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.
Re: [GNC] When closing books, equity statement report is incorrect
On Sun, Oct 22, 2023 at 9:59 AM Michael or Penny Novack < stepbystepf...@comcast.net> wrote: > Sorry, but this isn't really a gnucash question. > > By which I mean if you knew how to do this (by the standards of your > jurisdiction) were the books being kept the old fashioned way, pen and > ink on paper, you would have little difficulty doing it with the books > being kept using gnucash. The "retained earnings" (or "losses" shown by > gnucash in the Balance sheet are for a VIRTUAL account representing the > UNCLOSED income and expense accounts. > > It looks like you would be wanting to use explicit accounts (in equity) > which you can do by closing the books the old fashioned way (ignore the > gnucash "close the books" tool). On Sun, Oct 22, 2023 at 11:48 AM Adrien Monteleone < adrien.montele...@lusfiber.net> wrote: > The GnuCash workflow doesn't include 'closing the books'. > > That function was added by request, but it is entirely optional. I need to do three things after a given financial reporting period: * produce a report that communicates revenues and expenses over the period * produce a report that communicates the final balances at the end of the period * produce a report that communicates any changes in shareholder equity that occurred over the period It looks like I can accomplish the first two things with the built-in Income Statement and Balance Sheet reports without doing any kind of closing process (built-in or manual) so that works fine. For the third objective, I believe the Equity Statement report will pick up on net income (or loss) as well as capital investments even if I refrain from closing the books, so that works fine too. To finish up the third objective, how would I enter a dividend into the GnuCash so it shows up on the report? If I was using an explicit account, I would probably choose to debit Retained Earnings equity account and credit a Dividends Payable liability account to declare a dividend. In this case where I'm sticking with the virtual Retained Earnings (or Losses) account, I believe I won't be able to do that. Thanks for the explanation about the virtual accounts, good stuff to know. Let me know if I'm missing something with this last bit. ___ 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.
[GNC] When closing books, equity statement report is incorrect
How do I close my books at the end of a period and have the Equity Statement Report correctly show capital investments and withdrawals without classifying retained earnings as either? Retained earnings are neither. I've every combination of workflows I can think of. * closing Q3 books into a separate top-level Income Summary account then transferring (in Q4) retained earnings and any declared dividends into Retained Earnings (an equity account) and Dividends Payable (a liability account) * closing Q3 books directly into Retained Earnings and later (in Q4) transferring declared dividends into Dividends Payable * using closing and dividend transaction descriptions that match the closing entries pattern in the Equity Statement report, that do not, or any combination of the two * including and excluding the Income Summary and/or Retained Earnings accounts in the Equity Statement report * closing Q4 books the same way as I closed Q3 My Q4 report is either full of incorrectly-interpreted numbers it's pulling from the Q4 closing entries (if I don't exclude them) or it's just missing data (if I exclude a transaction that includes transfers to retained earnings or dividends payable.) I can't find a way to do this that works. What is this workflow supposed to look like? ___ 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.
