David, I must admit, I knew about all of those cases, and my brain didn’t even register them. (I’m on a much simpler basis now, so generally don’t bother, or I just do the entries as I go.)
It’s been nearly 20 years since I dealt with a 13 period year, but for sure, that would be a good use case. (almost a necessity for sane P&L comparisons in the restaurant biz) Of course, accruals, depreciation, yearly/quarterly expenses and such call for adjusting entries. I don’t know what I was thinking, but thanks for the well articulated list. Sorry to take your time, but others will certainly benefit. Regards, Adrien > On Jul 25, 2018, at 11:42 PM, DaveC49 <davidcous...@bigpond.com> wrote: > > Adrien, > > The main function of the trial balance is to ensure the accounts are > numerically correct before any adjustments to the accounts are made before > producing the final financial statements. It should be just a straight > listing of the balance (credit or debit) of all accounts in the chart of > accounts and the sum of all credits should equal the sum of all debits. > > This is usually the starting point for adjusting the accounts. Closing the > books is not just simply a transfer of the income and expenses for the > accounting period to equity. Prior to this, the accounts may require > specific adjustments which reflect the nature of the business and the > particularly the taxation rules which apply to it. Even though GnuCash is a > perpetual system it will require these adjustments to be made. This is also > the function of what was a 13 month financial year in some accounting > systems, in which the 13th virtual month was used to record and process > these adjustments without affecting the data for the 12 actual months, but > was included in the current accounting period. > > Adjustments are normally made for things which affect more than a single > accounting period like prepaid expenses, depreciation of non-current assets, > accrued expenses, accrued revenues and unearned revenues and the differences > between accounts recorded on a cash (when the money is actually received or > paid) or recorded on an accrual basis (when the income is earned (e.g. when > a report is produced in a consulting business) or expenditure is incurred in > an accounting sense in accordance with the matching principle) so that the > correct income and expenses associated with earning it are recorded in the > correct accounting period, mainly for taxation complliance. > > Not so important in personal accounting and usually many small businesses > below a specified income/turnover level where cash accounting is allowed to > be used for taxtaion purposes, but certainly significant for larger > businesses which must use accrual accounting under taxation legislation. > > An example can be in something like manufacturing where you may purchase > materials is one period (i.e. outlay the money) but you actually incur the > expenditure in another accounting period (for example when you make the > product) but the associated revenue may even be produced in a third or > subsequent accounting period in which you sell the product. > > David > > > > > > ----- > David Cousens > -- > Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > ----- > 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 To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
