| Typically one of the most important parts of | | | | balance.A simple invoice to an account customer |
| setting up new accounting software would be to | | | | should have a few simple entries based on the |
| be able to invoice your customers in a | | | | following.The invoice was for $100.00 plus a 10% |
| professional manner and to control who owes you | | | | GST therefore a total of $110.00. The goods you |
| what and how long it has been outstanding for.So | | | | sold may have a cost of $50.00 (excluding GST). |
| this will be your second step, if you set up your | | | | The sale was on the customers account. The |
| ledger first, otherwise it is where you will | | | | entries should be similar to the following.Sales |
| start.Before you start the actual process of | | | | (Profit & Loss) 100.00 Credit |
| invoicing from your new accounting software | | | | Cost of Sales (Profit & Loss) 50.00 DebitTrade |
| package you will need to set up your customers, | | | | Debtors (Balance Sheet) 110.00 Debit |
| some products and then almost certainly enter | | | | Stock on Hand (Balance Sheet) 50.00 Credit |
| into the system the balances that customers owe | | | | GST Liability(Balance Sheet) 10.00 CreditAll adds |
| you at this stage.There will probably be provision | | | | up to zero (total debits equal total credits) and |
| in your accounting software for entering | | | | each entry has a corresponding opposite entry |
| customer opening balances.The age trial balance | | | | somewhere else)Some accounting software may |
| that you print out of your accounting software | | | | not show a simple entry for cost of sales but |
| must equal the manual list that you started with. | | | | rather have a combination of three accounts - |
| If it doesn't because you have made a mistake | | | | Opening Stock, Purchases, Less Closing Stock. If |
| somewhere, left an entry out, or even entered | | | | so there is a separate section on this towards the |
| the same amount twice, and you start using the | | | | end called Opening and Closing Stock |
| package for invoicing without rectifying the | | | | Entries.Assuming your system has a simple cost |
| problem then you will just make it harder for | | | | of sales account then your entries should explain |
| yourself because you don't have anything to | | | | themselves but, put simply, it will have made two |
| balance back to. Do not start invoicing in the | | | | or three entries in the Profit and Loss section |
| accounting software before your customer | | | | -Sales |
| balances balance exactly.If you can you should | | | | Cost of Sales |
| separate the balances into current. 30 - 60 days | | | | (and GST Collected if your system runs that |
| old and 60 and over days old. Your system should | | | | way)And three in the Balance Sheet section |
| have provision to enter them as such. By doing | | | | (Assets and Liabilities)All of the entries add up to |
| so you will be able to print a customer aged trial | | | | zero. But we can also see something else very |
| balance report from day one and customer | | | | important in our overall understanding of the |
| statements from month end one. These are two | | | | ledger.All revenue or income accounts are |
| of the more important reports in any accounting | | | | CREDITS |
| software package because it shows what money | | | | All expense accounts are DEBITS |
| is owed in what time brackets and gives you the | | | | All asset accounts are DEBITS |
| opportunity to chase the older and overdue | | | | All liability accounts are CREDITSThere are some |
| accounts. REMEMBER - the longer a customer has | | | | extra entries that could have occurred -You may |
| owed you the money the harder it often is to | | | | have also charged your customer a delivery or |
| collect it.Once your customer opening balances | | | | freight charge, you may also have applied a |
| balance in the accounting software you should be | | | | rounding adjustment to round off to the nearest |
| in a position to start invoicing.If your accounting | | | | 5 cents etc. Freight would have been a credit, as |
| software runs in real time mode (you don't have | | | | in income and the rounding could go either |
| to do any updating to the general ledger) you | | | | way.Your accounting software could also allow for |
| should be able to go to the general ledger and see | | | | a discount to be given at the bottom of the |
| the entries after you have done your first invoice. | | | | invoice so this would show as a debit in cost of |
| If you run in batch mode (like having to do an end | | | | salesI have been involved in all aspects of the |
| of day update or similar) then do the update to | | | | accounting software industry for over 20 years. I |
| get the entries into the ledger for you.Now go to | | | | run several websites that specialize in various |
| the ledger and find the entries. Print a Ledger | | | | subjects including that gives advice on all aspects |
| financial report and see what has happened, | | | | of accounting software from choosing, setting up |
| where the entries have gone. Typically look for | | | | and using it. |
| the Profit and Loss report as well as the trial | | | | |