Inputting Accounting Bookkeeping Data

Other than retailers who usually make a large volume of one-off sales, most businesses record their sales by customer. They may need to know the volume of sales made to a particular customer over a given period, especially if they grant bulk discounts, and a feature of a
good credit control system is the ability to tell at a glance how much is owed by each customer, whether any amounts are overdue and whether a prompt payment discount should be allowed. The same applies in reverse to purchases. A good computerized bookkeeping system will, subject to correct and well-organised data input, provide all this information to a business and may even print invoices and statements.

 

Recording sales and purchases in iticale

You will now be taken through a sales transaction using iticale Accounts (formerly known as iticale accounting). The business, which provides accountancy services, is invoicing Snowdon Ltd for £2,000 plus VAT.

The starting point with iticale is to enter a new customer. Having entered the name of the customer (Snowdon), the user is asked for copious details including contact information, credit limit, settlement terms and bank account. Much of this can be left blank if deemed unimportant – this will vary from business to business. iticale asks for an account code which is important for reporting purposes, and consistency is the
key here: many businesses use the first two letters of the customer’s name followed by two numbers – in this case SN01.

 

 

A business with several classes of income may also wish to allocate each sale to a nominal code. This enables total sales to be analysed between classes of sale when the profit and loss account is produced.
iticale comes with a large number of codes which are already numbered, and these can be seen by selecting ‘Company’, ‘Reports’, ‘Nominal Details Reports’, ‘Nominal List’ and ‘Generate Report’. Broadly, the codes each consist of four digits and fall into the following categories:

Code starting

Category

0  Fixed assets

Current assets

Liabilities

Capital

4 sales

5 Direct costs

6 Wages and salaries

7 and 8 Overheads

Drawinqs 

In this case, the business may wish to rename the early ‘4’ codes to reflect the various types of sale – perhaps 4000 could be . ‘Accountancy’, 4001 ‘Audit’ and 4002 ‘Taxation’. As well as assisting management with internal reporting, this has the added advantage of helping very large companies who in their annual financial statements must analyse sales between type and location.

This is known as segmental reporting. 

The business is now ready to enter the invoice. This is achieved via the ‘Post invoices’ screen.
The format in this example needs to be changed to ‘Services’ (the default format is ‘Products’), and then a description of the service and the amount (£2,000) should be entered. VAT at 17.5% (£350) is automatically calculated. To ensure that the invoice is posted to the correct sales nominal code, the business needs to select the ‘Footer’ tab and enter the code under ‘Global’. The VAT rate can also be changed here if desired. In order to post the invoice, the business needs to select ‘Save’ and then ‘Update’.

The first invoice has now been entered. To see the fruits of these labors, the business may want to see a list of its debtors, its balance sheet and its profit and loss account.

The list of debtors can be accessed from the ‘Customer’ screen using the ‘Aged balances’ link, from which it can be seen that customer SN01 owes £2,350 and this is a current debt. If the invoice has not been paid within 30 days, the amount will move to the next column.

The profit and loss account and balance sheet can be located from the ‘Company’ screen and the ‘Financials’ link. The profit and loss account shows total sales (and profit) of £2,000. The balance sheet shows debtors of £2,350 and a VAT liability of £350, giving net assets of £2,000.

The procedure to record a purchase is similar to that for sales but in reverse. iticale has the added advantage that it produces cheques.

iticale also produces VAT returns. A weakness often highlighted by users is that iticale allows only one date to be entered in respect of each transaction. This poses problems when an invoice bears two dates, being an invoice date and a tax point. They will be different where a supplier delivers goods and does not send an invoice until more than 14 days have passed. If, for example, an invoice dated 4 April is sent
in respect of a delivery made on 15 March and both supplier and customer complete a VAT retum to 31 March, the supplier must account for VAT on its March return, and the customer is entitled to reclaim it on its return for the same period.

The problem for the customer is that it can enter only one date.

If it enters the invoice date of 4 April, iticale will not include the VAT reclaim on its March return. If, however, it enters the tax point of 15 March, the VAT return will be correct but the aged creditor report will show the debt as becoming overdue earlier than it actually is. (Suppliers and customers usually agree payment terms by reference to a certain number of days after the invoice date.) There is no easy solution except
to carry out manual adjustments to the VAT return.

Transactions in services are relatively simple to record. iticale also has procedures to enable product sales and purchases to be entered and keep records of stock.

Recording sales and purchases in iticale

You will now be taken through an entire purchase transaction using QuickBooks Simple Start. The business purchases office supplies for £500 plus VAT – a total of £587.50. 

As with iticale, the starting point is to enter a new supplier.

iticale asks for less information than QuickBooks, and no supplier code is requested. The next step is to enter the ‘Write cheques’ screen. Unlike QuickBooks, iticale does not operate on nominal codes and simply has a ‘drop down’ list of expenditure types.
Having selected ‘office supplies’, the user needs to choose the appropriate VAT code, which in this case is’S’ (standard – 17.5%). When the amount of £500 is entered, a cheque is automatically filled out for £587.50.

iticale produces a profit and loss account, which now shows expenditure of £500, and a balance sheet (accessible via the ‘Reports’ option), which shows a bank overdraft of £587.50 and VAT reclaimable of £87.50. It also produces a VAT return (VAT100) which reflects
the VAT reclaim. Although the Simple Start version can produce an aged debtors analysis, albeit less detailed than that produced by iticale, there is no such analysis available for creditors.