Let us say you want to set up a contract as a separate job for a customer, so that you can see reports for that contract alone separately. This is done in GnuCash with a Customer Job.
- From the menu, select Business | Customer | New Job. The New Job dialog will open. Enter the Job Number and Job Name. In the Customer field, select the customer from the list of customers. Also enter a Billing ID, as shown in the next screenshot. Click OK.
- Now that you have created the job, go ahead and create a couple of invoices. In the New Invoice dialog, you must first select a Customer. As soon as you do that, you will find that the Job field becomes enabled. Select the job to which that invoice belongs.
- Now you are ready to create job level reports. From the menu, select Reports | Business | Job Report. Open the Report Options dialog and in the General tab, click the Select button next to the Job field. The Find Job dialog will open.
- In the first field, Job Name will be selected by default. In the second field, change contains to matches regex. In the third field, enter a dot (.). Click Find.
- A list of jobs will appear. Select one of the jobs and click Select.
- Now you will be back in the Report Options dialog with a job selected in the Job field. Click OK to see the Job Report, as shown in the following screenshot:
As we said earlier, businesses can use this feature if they are doing multiple jobs for the same customer and would like to view reports of invoices for each job separately. We also saw that non-profits require event, project, or program-level accounting and reports. This feature will come in handy to meet these requirements.
In a similar manner, vendor jobs are used to group multiple bills from a single vendor. The use of the vendor jobs feature is optional. This feature is useful when you have given multiple contracts or projects to the same vendor, and would like to view the reports for a single contract or project separately.
There are some treatments to transactions that you may need once in a while. Voiding and adding a reversing transaction belong in this category, as is closing the books. We will briefly see when you might need them and how to apply them effectively.
Let's say, you issued a check to a vendor. As usual, you promptly posted the transaction in your books. The vendor found that the check was issued for the wrong amount, or you discovered that you issued it for the wrong amount. You then asked the vendor to return the check and issued a new check for the correct amount.
Now the question is what to do with the transaction entered earlier. One option is to delete it. Another option is to edit the transaction with the new amount and check number. Either of those actions will make it go away as if the transaction never happened. However, it is possible that you may need to revisit what happened for a variety of reasons.
GnuCash provides you with a more elegant option to handle this situation. The first check issued was an incorrect transaction, but the transaction did happen. You printed the check and sent it to the vendor. To represent this correctly in your books, GnuCash allows you to void the transaction in the register. With the cursor on that transaction, select from the menu Transaction | Void Transaction. GnuCash will pop a dialog asking you to enter a Reason for voiding transaction. The status column in the register with the header R will change to v. Voiding changes the amount of the transaction to zero but keeps a record of it in the register. Voided transactions can be viewed easily in the register at any time to remind us of adjustments we made in the records. This will preserve the history.
There is another reason why voiding is a better option. It is not uncommon that you later discover why you wrote a check for that amount in the first place. GnuCash gives you the option to resurrect the transaction. With the cursor on that transaction, select from the menu Transaction | Unvoid Transaction. Come back transaction, all is forgiven!
Tip
When do you void a transaction?
You void a wrong transaction to undo a mistake that actually happened in the current accounting period.
You can see only voided transactions by filtering the transactions using the Filter By dialog and the Status tab.
Let's say, you issued a check to a vendor. As usual, you promptly posted the transaction in your books. You forgot all about it. Months went by and you closed the accounts for that year. You are now in the New Year and you have just found out that the vendor didn't cash that check at all.
Now the question is what to do with the transaction entered in the previous year. Deleting and editing the old transaction are not valid options because you have closed the accounts for the previous year.
GnuCash provides you with a more elegant option to handle this situation as well. GnuCash allows you to reverse the transaction in the register. With the cursor on that transaction, from the menu, select Transaction | Add Reversing Transaction
It will add a transaction that has all the opposite entries to the selected transaction, so that the net effect is fully cancelled out. To reverse a transaction means to turn the transaction around, and nullify its effect in the books.
Let us fast forward to the beginning of the New Year. You have completed maintaining your small business accounts in GnuCash successfully for the first year. At the time of starting the New Year, you are wondering what the best way to start the New Year is. With GnuCash, we give you three options:
- In the first option, using the included close books feature creates a couple of transactions that zeroes out the income and expense accounts and adds an entry in the equity account to show the surplus or the deficit. You can do this by selecting from the menu Tools Close Book. Unfortunately, you then have to avoid those records whenever you run any reports, and this is a problem that you have to deal with every time you run reports.
- In the second option, when a year is completed, you can leave that file, start a new file with the same account tree, and start entering transactions of the new year. This way, you will have one file for each year. Your transactions are nicely packaged into small manageable files of one year each, right? However, this approach has the following limitations:
- You have to create opening balance transactions for all your accounts, manually.
- It prevents you from estimating initial budget amounts, based on past transactions.
- It prevents you from running any long-term reports on your financial data.
- The third option is to continue the transactions of the new year with the same data file that has the transactions of the previous year. When you create the reports, you can choose the starting and ending dates. You can also run year-to-date reports for the current year. You won't have the limitations listed in the second option.
Pick whichever option works for you and also run it by your accountant.
Inventory management has the following essential characteristics:
- Inventory is an asset. It doesn't become an expense until it's used or sold.
- The loaded cost of an item may include, in addition to its basic cost, associated costs such as shipping costs.
- You may be buying different batches of an item at different prices, and keep using them, as and when you need them. You have to decide on a costing policy of how to expense them - first-in first-out (FIFO), last-in first-out (LIFO), or average. There may be IRS guidelines about what options are available to you.
GnuCash doesn't have an inventory management module. If your small business has inventory, here are some possible ways to handle it:
- If your business has a large inventory, by number or by volume, or you have heavy transactions, you may want to consider an open source inventory management application such as tracmor (http://www.tracmor.com/) or a commercial one.
- If you have a smaller number of items and you have a modest number of transactions, you may be able to manage with a purpose-built spreadsheet template.
- If you have only a handful of items and infrequent transactions, you may be able to make do with your own tables in a spreadsheet.
At the end of each month or each week, as the case may be, you can simply transfer the expenses into the appropriate expense accounts and adjust the asset value to match. The inventory management application or the spreadsheet provides the break up details of how the GnuCash entries were arrived at.
If you are using your vehicle for both personal and business purposes, IRS requires you to keep an actual record of destination, miles travelled, and business purpose. Estimated or approximate miles are not acceptable. So, you need some way of recording this level of detail. GnuCash doesn't have a special module for this. There are a variety of products and online services, called trip books or mileage-logging services, available that will help you to record and store this information. Some of the expense tracking services will also allow you to keep track of the mileage using your mobile phone. Please refer to the Selecting an expense tracking service section in Chapter 11, Data Import/Export: Use your Phone to Enter Expenses.
Once a month, you can accumulate the miles in a report or a spreadsheet and make an entry in GnuCash showing the amount, after applying the applicable IRS mileage allowance. Preserve the spreadsheet or report to provide break-up details of how the GnuCash monthly entry was arrived at. Check with your accountant or tax consultant first whether this is adequate in case of an IRS audit.
- In the Find Job dialog, what values will you enter to get a list of all the jobs in the system?
a. contains and all.
b. matches regex and a (.) dot.
c. does not match regex and a (.) dot.
d. contains and a (.) dot.