In our jurisdiction, we are permitted to use cash accounting (and there are tax advantages to doing so) for our line of business.
I still use the business features, putting through invoices even when payment is immediate (I’d like a “post & pay” shortcut, but I don’t know whether anyone else would…). Having invoices gives me a nice easy way to track sales tax where appropriate, and lets me search for how much of X we sold to whomever. Business features are useful in spite of the fact that I have to hack around the accrual accounting system at the end of the year. > On Dec 8, 2017, at 7:57 PM, DaveC49 <davidcous...@bigpond.com> wrote: > > Hi Maf, > > Just a slight clarification on what accrual accounting means. > > The GAAP contains certain principles about when income is considered to be > earned and when expenses are considered to be incurred and when they are to > be recognized/recorded in the accounts. These are not necessarily coincident > in time with the receipt of payments for income or the payment by you for an > expenditure for reasons which may be unrelated to you offering or accepting > payment under terms of credit. > > In accrual accounting income is for example considered to be earned at the > time when you perform the work that entitles you to receive that income even > though you may not actually receive the payment until some time later (for > example after submitting a report). > > Similarly you may incur an expenditure in accrual accounting terms at the > time you enter into an agreement to purchase something, not necessarily when > you actually make the payment. This can of course complicate the accounting > and can be important in the tax accounting for many business. This is what > defines accrual accounting. > > Most tax jurisdictions allow use of a simplified form of accounting (usually > under a specified turnover threshold and under other specified conditions) > where you record in your accounts income at the time you receive the payment > and expenditure at the time you make the payment. This is usually referred > to as accounting on a cash basis or Cash Accounting. > > The difference is in the timing of the recording of an event, e.g. the > issuing of an invoice, and is not necessarily related to the use of A/R or > A/P per se. > > These (A/R, A/P) relate specifically to a business providing credit to its > customers under certain terms it specifies or accepting credit from its > suppliers under the terms they specify and they can be used both with > Accrual or Cash accounting. > > > David > > > > ----- > David Cousens > -- > Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > 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. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org 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.
