Double-entry accounting for non-dummies
September 20, 2012 5:39 PM Subscribe
In a modern accounting system that uses double-entry accounting, I believe each line on an Income Statement reflects one or more GL account period *totals*, correct? Does that also apply to Purchases/Cost Of Goods Sold?
posted by edjusted to Work & Money (10 answers total)
By "total" I mean both the debit and credit side of the GL accounts. The reason I'm asking is because we're trying to troubleshoot a problem with our Income Statement. We've found that the total amount of our vendor invoices for a particular period (e.g. we had $1000 of vendor invoices in Aug) corresponds to just the Debit side of Inventory Clearing, which is part of Purchases.
The Period Total includes $x on the Credit side, apparently from inventory receiving, and that's the wrong amount.
Every single other line on the Income Statement uses the Period Total amount from the corresponding GL accounts except for this one.
I've tried researching both on the internet and from some accounting books I have (I'm not an accountant) but nothing I've found goes quite into this much detail.
Is it actually possible that we'd want the report line to get its number from one "side" vs the Total? Or is there something screwy with our setup?