| Along the lines of what Magfarm said, here's another approach.
(1) I forget about trying to have a cash P&L. The only time I want a cash-based report is the Tax Report I get out of QuickBooks, for income tax purposes.
(2) For any Expense account, you might add a couple subaccounts, like this:
Seed Expense Prepaid Seed Seed to Inventory Seed from Inventory
The key, is that Seed Expense and Prepaid Seed both have a Tax Line associated with them in the account's setup. But the two Seed to/from Inventory subaccounts **do not* have an associated Tax Line.
(3) Normally during the year, you post expenses to Seed Expense. But when entering an expense that's a prepay, or even just something that (in an accrual sense) is really an expense of "next year", you post that to Prepaid Seed.
(4) At year's end (or whenever you want to prepare a Balance Sheet), you make a journal entry to transfer the balance from Prepaid Seed to an asset account--Inventories:Seed, or whatever you call your seed inventory account. But you only want to use the *balance* of Prepaid Seed--don't actually post to it. Instead, your journal entry would be:
Debit: Inventories:Seed Credit: Seed Expense:Seed to Inventory
(The real purpose of the Prepaid Seed subaccount is to give you easy access to a total for prepaid seed. You could do without it, posting all seed expenses to Seed Expense...but then you'd have to pick through your Seed Expense transactions to get a total for the prepays. Having a subaccount is simpler.)
(5) Then next year when you use the Seed, transfer the appropriate amount from your seed inventory account to Seed from Inventory subaccount.
Debit: Seed Expense:Seed from Inventory Credit: Inventories:Seed
Since the two Seed to/from Inventory subaccounts don't have a Tax Line, they'll be ignored for cash-basis tax reports. But whenever you are willing to make the journal entries I've described, you can have a (mostly) accrual P&L and Balance Sheet.
One more thing. Of course you wouldn't need both Seed to/from Inventory subaccounts. You could do with just one--call it Inventory Transfers or something. But a year from now if you need to look back at your records to figure out some oddball occurrence, having two separate subaccounts for this will make your life easier.
Mark Wilsdorf Flagship Technologies, Inc. QuickBooks™ Add-Ons and Solutions You Can Use http://www.goflagship.com
Edited by Flagship 1/24/2011 10:20
|