Re: [GNC] Question about Profit-Loss Report

[R. Victor Klassen]

In our jurisdiction farms are permitted to choose whether to use cash or 
accrual, and there are various tax advantages to using cash-based.

Happily, December/January is the time of lightest business, so the difference 
isn’t huge when it comes to accounting.

I do find I need to unpost and re-post invoices (dated Dec 31) when they are 
issued but not paid; and similarly bills that are issued but not due (or paid) 
until after the year end I post with a January 1 date.

If and when I’m audited by the taxing authorities I explain what I’ve done and 
they’re good with it.

> On May 31, 2021, at 9:08 PM, Alan Hopkins  wrote:
> 
>   Hello Howard
>   I agree with both Michaels - you need to understand the difference
>   between accounting records & reports prepared on an accruals basis vs a
>   cash basis. You should do some reading on basic accounting.
>   GNUCash used for business uses the accrual basis - (invoices are
>   registered in accounts receivable, bills are registered in accounts
>   payable).  Depending on the number of invoices & bills involved, you
>   may find that you need to develop your own cash report on a
>   spreadsheet.
>   Some of these links may  be of help to you:
>   [1]https://www.accountingtools.com/articles/how-to-convert-accrual-basi 
> 
>   s-to-cash-basis-accounting.html
>   [2]https://www.bookstime.com/articles/accrual-to-cash-conversion 
> 
>   [3]https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual- 
> 
>   to-cash-conversion-excel-worksheet/
>   GNUCash is excellent software (a big thank you to the developers!) and
>   you can get more understanding of basic accounting and using the
>   business features by referring to the Tutorial & Concepts guide:
>   [4]https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide 
> 
>   I hope that is of some help to you
>   Cheers
>   Alan
> 
>   On 1/6/21 12:42 am, Michael Hendry wrote:
> 
> On 31 May 2021, at 15:10, Howard M. Fried [5] > wrote:
> 
> I have several invoices that were issued in 2020 but paid in 2021. These 
> funds a
> re not included in a P&L report for 2021, apparently because the report is 
> based
> on date of invoice issue, or have I missed something.
> 
> Is it possible to get the 2020 Sales that were paid in 2021 into the report 
> for
> 2021?  Simply extending the Report date range backward is not a solution 
> because
> many invoices that were issued and paid in 2020 will be included.  Or am I to 
> i
> nclude unrealized assets for 2020 as profit, like the P&L report does (I have 
> no
> accounting, financial, or legal experience in such matters).
> 
> Thank you for considering,
> Howard Fried
> 
> Not an accountant either, Howard, but I believe the approach varies according 
> to
> whether your books are kept on a cash or an accrual basis.
> 
> If cash, then reports are based on the date when you received income, or the 
> dat
> e you made a payment for expenses.
> 
> I don’t use the business features, but I think that you will be working on an 
> ac
> crual basis, and have reports on Accounts Receivable and Accounts Payable 
> which
> carry over the end of the financial year.
> 
> Michael
> 
> 
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> References
> 
>   1. 
> https://www.accountingtools.com/articles/how-to-convert-accrual-basis-to-cash-basis-accounting.html
>  
> 
>   2. https://www.bookstime.com/articles/accrual-to-cash-conversion 
> 
>   3. 
> https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual-to-cash-conversion-excel-worksheet/
>  
> 
>   4. https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide 
> 
>   5. mailto:cursor...@gmail.com 
>   6. mailto:gnucash-user@gnucash.org 
>   7. https://lists.gnucash.org/mailman/listinfo/gnucash-user 
> 

Re: [GNC] Question about Profit-Loss Report

[Mahon Finbar]

All very understandable. It has always intrigued me how accountants deal 
with 'late payments' i.e. bills paid after the close of the year. If I 
understand the discussion, ongoing (accrual based) businesses are always 
behind when it comes to an analysis of the state of play, unless all 
invoices are paid within the accounting period? Is that why a cash based 
spreadsheet is needed?


Isn't it possible in GNU to 'clear' an entry when the amount is paid? 
Then it will appear in the reconciliation?


Just a question, I don't want to drag out the discussion.

On 01/06/2021 04:13, Howard M. Fried wrote:

On 5/31/21 9:08 PM, Alan Hopkins wrote:

Hello Howard

I agree with both Michaels - you need to understand the difference 
between
accounting records & reports prepared on an accruals basis vs a cash 
basis. You

should do some reading on basic accounting.

GNUCash used for business uses the accrual basis - (invoices are 
registered in
accounts receivable, bills are registered in accounts payable). 
Depending on
the number of invoices & bills involved, you may find that you need 
to develop

your own cash report on a spreadsheet.

Some of these links may  be of help to you:
https://www.accountingtools.com/articles/how-to-convert-accrual-basis-to-cash-basis-accounting.html 

 


https://www.bookstime.com/articles/accrual-to-cash-conversion

https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual-to-cash-conversion-excel-worksheet/ 

 



GNUCash is excellent software (a big thank you to the developers!) 
and you can
get more understanding of basic accounting and using the business 
features by

referring to the Tutorial & Concepts guide:
https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide


I hope that is of some help to you

Cheers

Alan


Thank you Alan, and both Michaels.  I was an educator for 34 years 
before launching a second career as an Editor.  Clearly, I need to 
take up the role of student and learn some basic accounting methods.  
I will certainly examine the materials that you have so kindly provided.


Regards,
Howard


On 1/6/21 12:42 am, Michael Hendry wrote:

On 31 May 2021, at 15:10, Howard M. Fried  wrote:

I have several invoices that were issued in 2020 but paid in 2021. 
These funds are not included in a P&L report for 2021, apparently 
because the report is based on date of invoice issue, or have I 
missed something.


Is it possible to get the 2020 Sales that were paid in 2021 into 
the report for 2021?  Simply extending the Report date range 
backward is not a solution because many invoices that were issued 
and paid in 2020 will be included.  Or am I to include unrealized 
assets for 2020 as profit, like the P&L report does (I have no 
accounting, financial, or legal experience in such matters).


Thank you for considering,
Howard Fried
Not an accountant either, Howard, but I believe the approach varies 
according to whether your books are kept on a cash or an accrual basis.


If cash, then reports are based on the date when you received 
income, or the date you made a payment for expenses.


I don’t use the business features, but I think that you will be 
working on an accrual basis, and have reports on Accounts Receivable 
and Accounts Payable which carry over the end of the financial year.


Michael


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Re: [GNC] Question about Profit-Loss Report

[Howard M. Fried]

On 5/31/21 9:08 PM, Alan Hopkins wrote:

Hello Howard

I agree with both Michaels - you need to understand the difference between
accounting records & reports prepared on an accruals basis vs a cash basis. You
should do some reading on basic accounting.

GNUCash used for business uses the accrual basis - (invoices are registered in
accounts receivable, bills are registered in accounts payable).  Depending on
the number of invoices & bills involved, you may find that you need to develop
your own cash report on a spreadsheet.

Some of these links may  be of help to you:
https://www.accountingtools.com/articles/how-to-convert-accrual-basis-to-cash-basis-accounting.html

https://www.bookstime.com/articles/accrual-to-cash-conversion

https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual-to-cash-conversion-excel-worksheet/


GNUCash is excellent software (a big thank you to the developers!) and you can
get more understanding of basic accounting and using the business features by
referring to the Tutorial & Concepts guide:
https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide


I hope that is of some help to you

Cheers

Alan


Thank you Alan, and both Michaels.  I was an educator for 34 years 
before launching a second career as an Editor.  Clearly, I need to take 
up the role of student and learn some basic accounting methods.  I will 
certainly examine the materials that you have so kindly provided.


Regards,
Howard


On 1/6/21 12:42 am, Michael Hendry wrote:

On 31 May 2021, at 15:10, Howard M. Fried  wrote:

I have several invoices that were issued in 2020 but paid in 2021. These funds are 
not included in a P&L report for 2021, apparently because the report is based 
on date of invoice issue, or have I missed something.

Is it possible to get the 2020 Sales that were paid in 2021 into the report for 
2021?  Simply extending the Report date range backward is not a solution because 
many invoices that were issued and paid in 2020 will be included.  Or am I to 
include unrealized assets for 2020 as profit, like the P&L report does (I have 
no accounting, financial, or legal experience in such matters).

Thank you for considering,
Howard Fried

Not an accountant either, Howard, but I believe the approach varies according 
to whether your books are kept on a cash or an accrual basis.

If cash, then reports are based on the date when you received income, or the 
date you made a payment for expenses.

I don’t use the business features, but I think that you will be working on an 
accrual basis, and have reports on Accounts Receivable and Accounts Payable 
which carry over the end of the financial year.

Michael


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Re: [GNC] Question about Profit-Loss Report

[Alan Hopkins]

   Hello Howard
   I agree with both Michaels - you need to understand the difference
   between accounting records & reports prepared on an accruals basis vs a
   cash basis. You should do some reading on basic accounting.
   GNUCash used for business uses the accrual basis - (invoices are
   registered in accounts receivable, bills are registered in accounts
   payable).  Depending on the number of invoices & bills involved, you
   may find that you need to develop your own cash report on a
   spreadsheet.
   Some of these links may  be of help to you:
   [1]https://www.accountingtools.com/articles/how-to-convert-accrual-basi
   s-to-cash-basis-accounting.html
   [2]https://www.bookstime.com/articles/accrual-to-cash-conversion
   [3]https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual-
   to-cash-conversion-excel-worksheet/
   GNUCash is excellent software (a big thank you to the developers!) and
   you can get more understanding of basic accounting and using the
   business features by referring to the Tutorial & Concepts guide:
   [4]https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide
   I hope that is of some help to you
   Cheers
   Alan

   On 1/6/21 12:42 am, Michael Hendry wrote:

On 31 May 2021, at 15:10, Howard M. Fried [5] wrote:

I have several invoices that were issued in 2020 but paid in 2021. These funds a
re not included in a P&L report for 2021, apparently because the report is based
 on date of invoice issue, or have I missed something.

Is it possible to get the 2020 Sales that were paid in 2021 into the report for
2021?  Simply extending the Report date range backward is not a solution because
 many invoices that were issued and paid in 2020 will be included.  Or am I to i
nclude unrealized assets for 2020 as profit, like the P&L report does (I have no
 accounting, financial, or legal experience in such matters).

Thank you for considering,
Howard Fried

Not an accountant either, Howard, but I believe the approach varies according to
 whether your books are kept on a cash or an accrual basis.

If cash, then reports are based on the date when you received income, or the dat
e you made a payment for expenses.

I don’t use the business features, but I think that you will be working on an ac
crual basis, and have reports on Accounts Receivable and Accounts Payable which
carry over the end of the financial year.

Michael


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References

   1. 
https://www.accountingtools.com/articles/how-to-convert-accrual-basis-to-cash-basis-accounting.html
   2. https://www.bookstime.com/articles/accrual-to-cash-conversion
   3. 
https://www.double-entry-bookkeeping.com/bookkeeping-basics/accrual-to-cash-conversion-excel-worksheet/
   4. https://www.gnucash.org/viewdoc.phtml?rev=4&lang=C&doc=guide
   5. mailto:cursor...@gmail.com
   6. mailto:gnucash-user@gnucash.org
   7. https://lists.gnucash.org/mailman/listinfo/gnucash-user
   8. https://wiki.gnucash.org/wiki/Mailing_Lists
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Re: [GNC] Question about Profit-Loss Report

[Howard M. Fried]

On 5/31/21 10:42 AM, Michael Hendry wrote:

On 31 May 2021, at 15:10, Howard M. Fried  wrote:

I have several invoices that were issued in 2020 but paid in 2021. These funds are 
not included in a P&L report for 2021, apparently because the report is based 
on date of invoice issue, or have I missed something.

Is it possible to get the 2020 Sales that were paid in 2021 into the report for 
2021?  Simply extending the Report date range backward is not a solution because 
many invoices that were issued and paid in 2020 will be included.  Or am I to 
include unrealized assets for 2020 as profit, like the P&L report does (I have 
no accounting, financial, or legal experience in such matters).

Thank you for considering,
Howard Fried


Not an accountant either, Howard, but I believe the approach varies according 
to whether your books are kept on a cash or an accrual basis.

If cash, then reports are based on the date when you received income, or the 
date you made a payment for expenses.

I don’t use the business features, but I think that you will be working on an 
accrual basis, and have reports on Accounts Receivable and Accounts Payable 
which carry over the end of the financial year.

Michael


Thank you Michael.  I'm a one-person business with one service 
(manuscript editing).  It never occurred to me that any method other 
than cash would be the way to go, and I just blindly set up my GnuCash 
account without thinking about it.  This year is the first in which the 
issuance and payment of invoices spanned two years.  I'll have to 
remember to add those funds come tax time.  Will have to check expenses 
as well.


Cheers,
Howard
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Re: [GNC] Question about Profit-Loss Report

[Michael Hendry]

> On 31 May 2021, at 15:10, Howard M. Fried  wrote:
> 
> I have several invoices that were issued in 2020 but paid in 2021. These 
> funds are not included in a P&L report for 2021, apparently because the 
> report is based on date of invoice issue, or have I missed something.
> 
> Is it possible to get the 2020 Sales that were paid in 2021 into the report 
> for 2021?  Simply extending the Report date range backward is not a solution 
> because many invoices that were issued and paid in 2020 will be included.  Or 
> am I to include unrealized assets for 2020 as profit, like the P&L report 
> does (I have no accounting, financial, or legal experience in such matters).
> 
> Thank you for considering,
> Howard Fried

Not an accountant either, Howard, but I believe the approach varies according 
to whether your books are kept on a cash or an accrual basis.

If cash, then reports are based on the date when you received income, or the 
date you made a payment for expenses.

I don’t use the business features, but I think that you will be working on an 
accrual basis, and have reports on Accounts Receivable and Accounts Payable 
which carry over the end of the financial year.

Michael


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Re: [GNC] Question about Profit-Loss Report

[Michael or Penny Novack]

On 5/31/2021 10:10 AM, Howard M. Fried wrote:
I have several invoices that were issued in 2020 but paid in 2021. 
These funds are not included in a P&L report for 2021, apparently 
because the report is based on date of invoice issue, or have I missed 
something.


Is it possible to get the 2020 Sales that were paid in 2021 into the 
report for 2021?  Simply extending the Report date range backward is 
not a solution because many invoices that were issued and paid in 2020 
will be included.  Or am I to include unrealized assets for 2020 as 
profit, like the P&L report does (I have no accounting, financial, or 
legal experience in such matters).


Thank you for considering,
Howard Fried 



This is less of a gnucash question than a fundamentals of bookkeeping 
question. You need to look up/understand the essential differences 
between books kept on the "cash basis" and books kept under the "accrual 
basis".


You mention "invoice" and that means that you are using "accrual basis" 
since gnucash only supports invoices when using the "business features" 
and that means accrual basis. However it appears that you want want a 
P&L report on the cash basis << transactions dated as of when cash 
received or cash paid).


I will repeat, using software to partially automate your accounting does 
not mean that you can skip learning some of the fundamentals. This is 
especially true if you want/need reports both on the accrual basis and 
the cash basis.  Doing and undoing the adjustments you would need for 
that not easy.



Michael

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