You'd need to ask the accountant at *least* two questions. (more will
arise, I'm sure)
1) where in the CoA does/should this 'provisions' account reside?
2) how do you determine its balance? (what other accounts affect it?)
Note, it is certainly possible in accounting (and in GnuCash) to track a
liability in one account to see if you've paid off a 'related/linked'
liability in another account. (not directly with some special feature of
the software, just with your understanding of how the CoA works)
This requires extra entries which amount to 'tracking' information, but
are certainly doable. (just more work)
Sometimes, due to time constraints, this treatment is necessary. Others,
it is simply a matter of preference.
For example, pass-through liabilities are treated this way. (when you
collect sales taxes due to some government entity at point of sale, they
are recorded as due immediately, and then when you pay them, you reduce
that 'due' liability.)
The same can work for other liabilities you 'plan' to pay. Though I'm
not specifically familiar with the treatment or term at hand, so by all
means, ask your accountant!
Regards,
Adrien
On 12/10/21 6:34 PM, Dr. David Kirkby wrote:
With all the usual disclaimers (not an accountant, not their jurisdiction,
ask your accountant), can anyone suggest where it would be sensible to
record "Provision for liabilities" in GnuCash? It is defined on the balance
sheet as
*Provisions *
*Provisions (ie liabilities of uncertain timing or amount) are recognised
when there is an obligation at the reporting date as a result of a past
event, it is probable that economic benefit will be transferred to settle
the obligation and the amount of the obligation can be estimated reliably. *
Does it seem reasonable, from the point of using the software, to just
stick it in as a liability? I was thinking of creating a "Provision"
liability under the Liability account
If anyone can confirm my suspicion seems reasonable, or can suggest a
better place to record this, I will do so.
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