Eric This is really a Cost Management Accounting issue which is usually beyond basic books on principles of Accounting so if you can find a book on Cost Management Accounting it may give a better understanding of the process.
An outline of the basic process for dealing with direct maerials and labour costs would be for the purchase of materials and application of direct labour to production on purchase Assets:WIP Inventory Dr xxxx Liabilities:Accounts Payable Cr xxx payments for purchase Assets:Bank Account Cr zzzz Liabilities::Accounts Payable Dr zzzz here zzzz may not be for a single purchase but for multiple purchases. when the labour is performed Assets:WiP Inventory Dr yyyy Liabilities:Wages Payable Cr yyyy when wages are paid Assets:Bank Cr pppp Liabilities:Wages Payable Dr pppp and again pppp may be the sum of several such entries. at the completion of the production process os a batch of product you would prepare a report of the costs of production for that batch and calculate a unit cost of the product. Your costs may for example include materials purchases at different times with a differnt unit cost. Then you would transfer the product from the Work in Progress Inventory to the Stock Inventory at that unit cost. (n widgets at unit cost ccc =n*ccc )=qqqq Asset:Inventory WiP Cr qqqq Asset: Inventory:Stock Dr qqqq These costs are usually expensed at the time of sale, not at the time they are incurred, through entries which decrease the inventory an expense through cost of goods sold. Similarly they don't affect income until they are sold. A typical sale entry would be Asset:Bank Dr xxxx Income Sales Cr xxxx Asset:Inventory:Stock Cr yyyy Expenses:COGS Dr yyyy There are a lot of complex parts of complex accounting for manufacturing processes (allowances for spoilage etc etc, overhead costs and many more) and whether using FIFO or some other basis for managing inventory. Often there will be standard treatments in your jurisdiction for particular industries approved by the tax authorities which make consulting a practising accountant in your jurisdiction with relevant experience a very good idea. The process above is generic and meant to be illustrative and does not constitute accounting advice which may be relevant to your situation. You will likely have to maintain many aspects of the cost management accounting outside GnuCash (e.g. spreadshetts or other software) as GnuCash does not have inventory and cost management programmed in and can only handle the accounts aspects of it. David Cousens On Sun, 2024-10-27 at 01:06 +0000, Eric Hammond wrote: > -----Original Message----- > From: gnucash-user > <gnucash-user-bounces+eric=jehammond....@gnucash.org> On Behalf Of > gnucash-user-requ...@gnucash.org > Sent: Friday, October 25, 2024 7:11 PM > To: gnucash-user@gnucash.org > Subject: gnucash-user Digest, Vol 259, Issue 61 > > Send gnucash-user mailing list submissions to > gnucash-user@gnucash.org > > To subscribe or unsubscribe via the World Wide Web, visit > https://lists.gnucash.org/mailman/listinfo/gnucash-user > or, via email, send a message with subject or body 'help' to > gnucash-user-requ...@gnucash.org > > You can reach the person managing the list at > gnucash-user-ow...@gnucash.org > > When replying, please edit your Subject line so it is more specific > than "Re: Contents of gnucash-user digest..." > > --------------------------------------------------------------------- > - > > Question: correct debit account for labor: > > I have completely replaced my defunct Quicken with GnuCash, and now > trying to get the details fine-tuned: > I am using Job cost accounting for my business, my main resource is > the OpenStax book - "Principles of Accounting, Volume 2: Managerial > Accounting" page224 - 226 > And a lot of internet searches... > > Entering my labor, parts/supplies would look like this: > Assets:Jobs:xxxxxx:WIP 500.00 > ________:Direct Labor 120.00 > Assets: Stock 20.00 > ________:Direct Labor 360.00 > > 1. If I use "Expenses:Direct Labor" as the credit account then those > account balances are all negative (which, at least, looks weird in an > expense journal) > 2. If i use "Income:Direct Labor" the balances are positive. > > With settings #2 all the tax reports look correct. I didn't check > during #1 settings. > > Which one is correct? Does GnuCash care about the negative balance? > Is there a better way log it? > > Thank you for a great accounting tool, and all your help. > > Eric Hammond > > ------------------------------ > > Subject: Digest Footer > > _______________________________________________ > > 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. > > > ------------------------------ > > End of gnucash-user Digest, Vol 259, Issue 61 > ********************************************* > _______________________________________________ > 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. _______________________________________________ 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. 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