I made a BIG tote, about 18"x24" with a gusset. 
 Here's what I did:

I arranged 35 6" squares.  Twelve for the front and 12 for the back and 11 for the gusset.

Using a 3/8" seam allowance I sewed the squares into strips and ironed seams open.

I try for perfect points each time.

The key to perfect points is accurate cutting, ironing and lots of pinning.

Iron front and back and gusset strip.

Cut lining for purse using your pieced pieces as a pattern, one liner piece for each front, back and gusset.  I used upholstery weight fabric that I have had forever in my stash.  Yay to stash busting.

Don't forget to make two inner pockets, I remembered just in time! Mine are large, 10"x8", but simple.  I made a large 2" hem at the top, then zig-zagged raw edges, finger mitered the corners, ironed it all down and using zipper foot, top-stitched 1/8" to attach pocket to lining about 2" from bag opening.

Large pocket big enough for any knitting accessories.

Next, sew front and back tote pieces to gusset.  Repeat with tote liner.

Snip corners

Now give the corners a good poke and iron both tote and liner as best you can.

Make two handles.  Cut two 28"x4.5" strips.  Lengthways, iron 1.5" in on each side.

Fold handle lengthways down center and using zipper foot, top stitch both sides 1/8" from edge.

Iron down a 3/8" seam allowance all around top opening of tote and tote liner.  Sew handles to wrong side of lining, 5" apart and 1.5" down so you can criss-cross some top-stitching to secure handle firmly.

I didn't take pics of the next step, but with wrong sides together, pin tote and liner together at top opening and top stitch these two pieces together. You are done.

There is no knitting project too large for this big guy.

Next time I might add a stabilizer for the bottom gusset, perhaps a piece of lightweight plastic cut to fit.

You might have guessed I am not cooking for a crowd tomorrow!  Tomorrow is Thanksgiving and we have been invited out.  Still, I am making a small turkey, only so we can have sandwiches and turkey soup this weekend! 

I have a lot to be thankful for and hope my American readers have a blessed Thanksgiving day.