At Sun, 11 Feb 2018 15:51:30 +0100 Jeff Abrahamson <j...@p27.eu> wrote:
>
> On 11/02/18 15:46, Robert Heller wrote:
> > Here is a "practical" application:
> >
> > Lets say you buy a case of tomatoes for $10 -- this would be a transaction
> > from your bank account (for the check you gave the vegetable wholeseller) of
> > $10 to your Assets:vegetables account. (It is not actually an expense!).
> > Then
> > you sell that case of tomatoes for $12. This would be a split transaction:
> > $10
> > from your Assets:vegetables account and $2 to an income account. The $12
> > would
> > come from whatever account the $12 was paid into (eg "Cash" if it was a cash
> > transaction). This brings the Assets:vegetables down to zero (you have no
> > vegetables in stock right now). At the end of the year you generate a report
> > showing the Assets:vegetables at the beginning of the year and and the end
> > of
> > the year. The difference is your "cost of goods sold" -- this is what goes
> > on
> > your tax form (actually, the form has your inventory at the beginning of the
> > year, and your inventory at the end of the year, plus whatever you spent to
> > acquire your inventory during the year, at least that is how the 1040C form
> > works and I guess theo 1040F is similar).
>
> Our emails crossed. I see what you mean, but I don't think the tax
> authorities would find that particularly legal here. It would also make
> VAT computations impossible, I think, although we are exempt from VAT.
If VAT is anything like Sales Tax, the sales transaction would include all of
the pieces as parts of the "split". This is what I do:
gross cash/payment in => 1) reduce inventory account by the cost of the goods
2) sales tax on the transaction to the sales tax
account
3) whatever is left over to an income account (this
will show up on your P&L report)
Yes, the only real gotcha is that vegatables are not durable goods, so you
have to account for spoilage somehow.
It is possible to group things:
Assets:Inventory:Vegetables
Assets:Inventory:Fruits
Assets:Inventory:Handicrafts
Assets:Inventory:Meat
etc.
(And further subdivide -- Assets:Inventory:Vegetables:Tomatoes,
Assets:Inventory:Vegetables:GreenBeans,etc. It would depend on the level of
detailneeded and you can generate reports using the accounts at different
levels, depending on what you need.)
>
> Thanks for explaining clearly!
>
--
Robert Heller -- 978-544-6933
Deepwoods Software -- Custom Software Services
http://www.deepsoft.com/ -- Linux Administration Services
hel...@deepsoft.com -- Webhosting Services
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