Tag Archives: Desktop accounting software for Mac

By account or by Item?

Software: MoneyWorks accounting software

You have an option of recording the invoice, payment or receipt transaction either via by account or by item tab. What’s the difference?

itemised product

You use the ‘By Account’ tab to record transactions which charge directly to the GL (general ledger) such as rent, repayment of the loan, purchase of assets, etc.; or some time cost of goods sold when you are not using the accounting software to track the inventory.

Use the ‘By Product’ tab when you itemised the products and services. Itemised product save time in data entry as the item description filled up automatically when using it in the transaction. It’s unlike the ‘By Account’ scenario where you have to type the item description as and when you use it.

It updates the quantity on hand and debits the inventory asset account when the inventory item has purchased, it then debits the cost of goods sold when the sales invoice has posted. It gives a real-time inventory status when the itemised product has used.

It depends on the business requirement whether to use the ‘By Account’ or ‘By item’ tab to enter data. Itemise your product if you want to standardise the product description and better data analysis on the data which you have captured.

MoneyWorks accounting system is suitable for small businesses managing their business finance. Book a demo today to find out how MoneyWorks works for your business.

GST on imported goods

Software: MoneyWorks accounting software

Oversea suppliers are not supposed to charge GST if they are not a GST registered trader. The GST is paid to the Custom or a forwarder (if they paid the GST on your behalf) when goods arrived.

You can use the cost of goods sold or an expense account as a dummy account in the account tab of a payment transaction to record the GST paid. For example, you paid $700 GST on goods purchased; the entry will be:

Detail line 1:
Account: Cost of Goods Sold
Taxable amount: 10,000
Tax Code: IM
GST: 700

Detail line 2:
Account: Cost of Goods Sold
Taxable amount: -10,000 (negative)
Tax Code: OP (or *)
GST: 0

Imported GST

The Cost of Goods Sold contra off with each other and left the GST paid.

Due to differences between the internal exchange rate and the rate used by the Custom, the taxable amount could be different from the purchase value in Singapore dollar.

Note: You are supposed to record the import permit number in either Transaction user field 1, 2, or 3 on both purchase invoice and the GST payment, which will use in the IAF (Iras Audit File) report later if required. The Transaction User field label can be renamed to ‘Permit No’ from the Document Preferences to ease the data entry.

Sign up a demo to find out how to use MoneyWorks efficiently to manage your business finance.

Advance payment to the supplier

Software: MoneyWorks accounting software

Advance payment to the supplier (without using the purchase order process) is quite similar to the advances received from a customer which we have discussed in our earlier post. The steps required for paying advances to a supplier are:

  1. Record the purchase invoice for advance payment from the supplier.
  2. Made payment to the supplier without offsetting the purchase invoice. That is, leave it as an overpayment.
  3. Record the actual (or final) purchase invoice from the supplier and deduct the advances paid.
  4. Paid supplier and offset the advances paid at the same time.

The purchase invoice of the advance payment which we listed above (1) is to facilitate the overpayment process. You have to record the invoice even if you are not receiving any invoices from the supplier. You should create an item and associate it with the advance payment to the supplier account (which is a current asset account type) if you are tracking of inventory, and add this item to the purchase invoice. The purchase invoice debits advance payment to the supplier and credit the accounts payable account.

Advance payment bill

A cheque number, electronic transfer reference number, or an internal reference number can be used as the purchase invoice reference number if you are not receiving any invoices from the supplier.

Double entry:
Debit Advance payment to the supplier
Debit GST Paid (Input)
Credit Accounts Payable

Proceed with the payment to supplier once the advance invoice has posted. DO NOT select the advance payment invoice during payment process so to force it to record as an overpayment.

Paid advances

Suspense account

Double entry:
Debit Accounts Payable
Credit Bank

You can use the advance payment to supplier account or create a dummy current asset account such as payment in transit in the ‘suspense a/c’ field to facilitate the overpayment process. MoneyWorks create two dummy purchase invoices automatically when overpayment to supplier has recorded; one debits the account listed in the suspense account and credit the accounts payable, and another reverse it.

Double entry:
Purchase Invoice 1:
Debit Payment in transit (dummy)
Debit GST Paid (input)
Credit Accounts Payable

Purchase Invoice 2:
Debit Accounts Payable
Credit Payment in transit (dummy)
Credit GST Paid (input)

The advance payment invoice and the overpayment are both showing in the account payable ageing report which eases the tracking of the advance payment.

The Accounts Payable Ageing

The advance payment to the supplier item with a negative value has to add to the actual invoice received from the supplier; with a negative value, this entry credit and offset the advance payment to the supplier account.

Supplier Bill

Double entry:
Debit Stock on hand
Debit GST Paid (input)
Credit Advance payment to the supplier
Credit Accounts Payable

Then, offset the advance payment to the supplier and invoice, which you have entered earlier, together when paying the balances.

Paid supplier

Double entry:
Debit Accounts Payable
Credit Bank

Note for multiple currencies user:
There might be differences in the advance payment to the supplier account if the exchange rate used in the advance payment invoice and the actual invoice are different. You have to pass a general journal to clear the balances in the advance payment to the supplier to the exchange gain/loss account.