Tag Archives: accounting software Taiwan

Should I use a credit note or cancel the transactions?

You have two options, credit note and cancel the transaction, to reverse an entry in MoneyWorks. Which method is better or rather when to use them?

Credit note

A credit note (a.k.a. Adjustment Note) is a document, usually for returns of goods or adjustments to past invoices. 

Assuming you issue an invoice to a customer. Then, due to an issue with the product sold, the customer has returned the goods, and you give a credit note to the customer to offset the amount owed.

How to enter a credit note in MoneyWorks?

You prepare an invoice (from the Show menu > Transaction > Sales Invoice) and click on the Reverse button to convert the sales invoice to a credit note. The credit note shows a negative quantity and extended price. 

Credit Note

The journal behind the sales invoice transaction:

    Debit Receivable account
        Credit Sales
        Credit GST Output
    Debit Cost of goods sold
        Credit Inventory assets

And the credit note will reverse the entry by:

    Debit the Sales
    Debit GST Output
        Credit Receivable account
    Debit Inventory assets
        Credit Cost of goods sold

Use the credit note to offset future invoices or the ‘Send refund to debtor’ function (from the command menu) if the customer has already paid the invoice.

Cancel transaction

The cancel transaction process in MoneyWorks is for reversing a wrong entry. 

To cancel a transaction:

  1. Highlight the entry.
  2. Go to the command menu, adjustment, then select cancel transaction feature.
Cancel transaction

Cancel a transaction will not remove it from the database. Instead, MoneyWorks create a reverse entry to offset the original.

Assuming you recorded payment (or purchase invoice) for utility expense twice, you may use a cancel transaction method to cancel the duplicated entry.

Although cancellation does a similar reversal as the credit note, you should not use cancellation for goods return or adjustment of invoices. Let’s say you use the cancel transaction method for goods returned from a customer, the journal behind the cancellation:

    Debit Sales
    Debit GST Output
       Credit Receivable account
    Debit Inventory assets
       Credit Cost of goods sold

Although it looks identical to a credit note, cancellation (and the cancelled invoice) will not show in the GST report. Therefore, you should consider using a credit note instead so the sales invoice and the adjustment shown in the GST report. Also, consider using a credit note instead of cancellation if both transactions are in a different financial period or cross between two GST cycles. 

You may consider adding a note (click add note button in the transaction) or a short memo in the description to indicate cancellation and wrong entry (and you may also change the transaction colour to facilitate future searching).

Those users, who understand coding, may consider adding a heading column into the transaction list with the formula:

    !testflags(flags, #3)

The test flags give a value of 0 or 1. 

The result ‘0’ indicate cancellation and a ‘1’ for a valid accounting entry.

In short, use the cancel transaction method for a wrong entry and credit note for all other reversals. Use credit note if you are confused between the two.

Multiple locations plug-in for MoneyWorks accounting software

Software: MoneyWorks accounting software

You can transfer and track the stock of each store with the Multiple Locations plug-in for MoneyWorks accounting software. Example, the retailer can do a store to store transfer or view the stock on hand (or stock value) of each item in each store from the item list if he/she has a few stores in the city.

MoneyWorks create a new stock code such as “StockCode/A” or “StockCode/B” to show stock in a different location. The Alpha-numeric code behind the stock code, which representing the stock location, is also recorded in the Category 4 field of the item profile. Hence, to do a stocktake of each store, you can print a stocktake list report with page break by location (Category 4).

multiple-warehouses

Financial year-end

Software: MoneyWorks accounting software

Financial Year (aka Fiscal Year) consist of financial periods used to calculate annual income statement for businesses. If you are following the Calendar month, then your financial year-end closing is December.

During financial year-end closing, besides preparing the accounting schedules and post all transactions, you have to do a stocktake, bank reconciliation and set a closing exchange rate.

Do a backup before you start a stocktake process from the command menu of the MoneyWorks accounting software. You have to do the stocktake process before your new financial year. Once the stock count has entered, complete the stocktaking process by activating the Finish Stocktake from the Command menu (ensure dated as the start stocktaking date). Then, print the Stock Valuation Report (usually I will keep a PDF copy as well) and backup your company file.

stocktake

You should reconcile your banks that are in foreign currency before set the exchange rate for the year-end closing. Once you entered the exchange rate, MoneyWorks will automatically generate unrealised exchange gain/loss journal to adjust the banks, accounts receivable and accounts payable which are in foreign currency.

Backup and lock the period once you have completed the financial year-end closing to prevent other users from recording transaction into the wrong period.

Merry Christmas!