On Sat, Sep 14, 2019 at 8:42 AM Taylor R Campbell <[email protected]> wrote: > > > Date: Sat, 14 Sep 2019 07:07:36 -0500 > > From: o1bigtenor <[email protected]> > > > > On Fri, Sep 13, 2019 at 10:33 PM Taylor R Campbell > > <[email protected]> wrote: > > > > > > > Date: Sat, 31 Aug 2019 20:59:16 +0200 > > > > From: Martin Michlmayr <[email protected]> > > > > > > > > This won't work for a business, however. Cheques are treated as > > > > immediate cash expenses: when you write a check, the money immediately > > > > gets deducted (in your books), even though in reality it only gets > > > > deducted from your bank account when the person deposits the check. > > > > > > Can you expand on the distinction you're drawing here? > > > > I can give some clues here. > > Almost all businesses are required to use an accrual accounting system. > > Only individuals are allowed to use a cash system. > > The distinction can be subtle but is crucial to entities like your taxation > > authorities. > > > > Some clarification using examples. > > > > You take possession of an item but pay for it 2 weeks later and that happens > > to be in another calendar year. > > In a cash based accounting system that item is deemed to have been > > purchased in that other year. This means that the expense is logged in the > > other year for taxation purposes. Accrual accounting would have that > > purchase > > logged into the year that the item was taken possession in. > > I don't follow how this is related to the distinction Martin was > drawing. Here's an accrual-based example where taking possession of > an item (`expense') happens in one year, the payment for the item > happens in another year, and the cheque clears separately from the > payment when you get your bank statement a month later: > > ; Order a batch of widgets. > 2018-12-30 Acme Widgets > Expenses:Widgets 100 EUR > Liabilities:Acme Widgets:Order #12837 > > ; Write a cheque for the batch of widgets. > 2019-01-05 Acme Widgets > Liabilities:Acme Widgets:Order #12837 100 EUR > Assets:Bank:Cheque:123 ;or Liabilities:Bank:Cheque:123 > > ; Reconcile the bank statement. > 2019-02-01 Bank statement > Assets:Bank:Cheque:123 100 EUR > Assets:Bank:Balance > > Can you expand on how _notating each cheque in its own ledger account_ > so that you can have separate dated records for writing the cheque and > for clearing it gets in the way of business accounting? > Sorry - - - I never said that anything got in the way of anything else in the business accounting.
I can understand why someone, a business owner, would want ALL THREE pieces of information. Part of the challenge is that your example is showing the distinction between three different viewpoints. The bank doesn't care when anything is happening. What is important to the bank is when the 'instrument' is drawn (check is cashed) and that's it. (The bank does sorta care as its a right royal pita dealing with checks after a stale date of over 3 months today.) Acme Widgets only cares that it gets its money. Bookkeeper cares that the cleared check matches an expenditure. Reading back to the beginning of the thread - - - the desire was to have some way of tracking all points of reference (previously mentioned 3 + that of the check writer) easily. I don't really know of an 'easy' way - - - just know I need to. Sorry for any confusion or misunderstanding caused!! Regards -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To view this discussion on the web visit https://groups.google.com/d/msgid/ledger-cli/CAPpdf5_ePaX8MVxnfe4NBoXB3Gvru0WuwUR1CKnzvkeREFqWUQ%40mail.gmail.com.
