Cash Accounting
Contents
Summary
You are only able to operate a Cash Accounting system under specific circumstances. Please check with your accountant and HMRC for specific financial advice before requesting to use Platinum Software for Cash Accounting.
More Information
Cash Accounting is a method of accounting whereby you account for VAT (output tax) on your sales based on the payments you receive, rather than on the VAT invoices you have produced.
VAT on purchases (input tax) is reclaimed once you pay the supplier and is calculated on the amount you pay. Under a normal accounting situation you would reclaim VAT on the Invoices you receive even if you haven't yet paid your supplier.
Posting Opening Balances
 | This would only usually be done when you are setting up your Platinum system. |
Outstanding balances have to be posted onto Customer or Supplier accounts as individual transactions under Cash Accounting. This allows the system to work out the VAT due/to be reclaimed when a payment is made.
- These outstanding transactions are posted in " Purchase Ledger/Sales Ledger Purchase/Sales Ledger Postings".
- At "Doc. type", choose the type of document you want to post.
- Choose 'Invoice' if you want to post an outstanding invoice.
- Choose 'Credit' if you want to post an outstanding credit.
- DO NOT select 'Opening balance'.
- At "Supplier:", enter the Supplier's account code or search for the supplier to whom the document applies.
- At "Document No", enter the invoice or credit number.
| This can only be up to 8 characters long. If the number you have is longer than this, make sure you enter the last 8 characters only. |
- At "Date", enter the date shown on the document from the supplier.
| You may wish to date these outstanding invoices and credits as the first day of the first month you are using Platinum, but provided they fall into the current financial year, it makes sense to use their existing date where possible. |
- At "Description", enter up to 15 characters to describe the document you are posting. This is what you will see when you view "Supplier History" so it should be used to identify the nature of the transaction, e.g. 'UNITS', 'PARTS', 'PETROL' or you could enter an Order Number. Alternatively you could enter 'OP BAL'.
- At the "Amounts" section of the screen:
- Enter the Nett amount(s) against the appropriate VAT Rates and press <Enter>. The V.A.T. will be automatically calculated.
- At "Centre", enter Purchase Centre '995' - Opening Balances.
| If this centre does not exist you will need to create it and link it directly to 'Z990' - Suspense Account. When you post your opening Trial Balance you will post the Debtors and Creditors balances to this centre to contra the opening balances posted to Suspense - click here. |
- Click [Done] and 'Accept' to save the posting.
Where can I see VAT outstanding on unpaid documents?
When an invoice or credit is posted onto the Sales Ledger or Purchase Ledger the entries into the system are explained in the example below:
 | For a sales invoice the Nett amount would Credit the appropriate Sales Centre, the VAT amount would Credit Z989 - VAT Liability Control and the Total amount would Debit Z994 - Sales Control (Debtors). |
When an invoice is paid the system will automatically transfer the appropriate VAT amount from Z989 to Z999 - VAT Outstanding. It would then appear in the relevant section of your VAT100 report.
See also
- Posting Purchase Invoices
- How do I Create a Sales or Purchase Centre?
- How do I run the VAT 100 report?
- How do I Enter an Opening Trial Balance?
- Recommended accounting routines
PL03 SL03
