Accounting with MYOB Accounting Plus v18

Chapter Four

Accounts Payable

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Recording a PurchaseImportant Points

A Purchase is obtaining goods for re-sale.

Purchases are obtained from Suppliers.

Amounts owed to these suppliers are called Accounts Payable.

Accounts Payable are Liabilities.

Purchases are credited to the creditor’s account (the Account Payable).

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Recording a PurchaseAccounting Background - The Debits

The value of the goods purchased increases the Inventory account.– This is an Asset, so it will be debited.

The GST Paid and Freight on the goods are business expenses.– Expenses are debit entries.

– GST Paid can also be viewed as an asset (also a debit) as it will be reclaimed from the ATO.

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Recording a PurchaseAccounting Background - The Credits

Cheque Account.

– If the goods are paid for now.

– An asset account being reduced is a Credit.

Trade Creditors (Accounts Payable).

– If the goods will be paid for later.

– This will increase the debt (liability).

– An increase in a liability is a Credit.

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The Invoice TypesUsed for different purposes.

Used to record non-

inventory purchases.Used to record

things purchased.

Used to record

professional

services.

Used to record

adjustments.

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The Card File

Used to store details about suppliers.

– The Profile contains name, address and contact details.

– Buying Details has other information:

Usual invoice type.

Credit limit.

Payment and discount terms.

– Payment Details contains bank information.

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The Card FileThe Supplier’s Profile

Insert the given supplier information.

Then click the Buying Details tab.

Click

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The Card FileThe Buying Details

Insert the given buying information.

Then click OK.Click

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Placing an OrderProcedure

1. Display a Service invoice.

2. Select Order (top left of the window).

3. Select the Supplier from the cards list.

4. Insert your requirements. You may or may not know the price.

You may or may not know the freight cost.

5. Record the order.

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Placing an Order

Insert the given order information.

Then click Record.

Click

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Your Order is Delivered

An Order is not a Financial Transaction.

– No debt is assumed until delivery.

Orders are kept in the Purchases Register where they can be edited.

When the order is delivered it is changed to a Bill.

– A Bill records a Financial Transaction.

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Locate your Order

Orders are kept in the Purchases Register.

Click on the Orders tab.

Change the Dates.

Click Change to

Bill.

Click

Dates

Click

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Update the Bill

Insert the new date

and invoice number.Insert

Check the price and insert the Freight charge.

Insert

Then click Record.

Click

This is now a debt (a liability) that must be paid by the due date.

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Paying the BillDiscounts – Accounting Background

A discount allows a debt to be settled without the full amount being paid.

Discounts are offered by suppliers:

– To encourage prompt or early payment of their accounts.

– To improve the supplier’s cash flow.

Suppliers specify a date by which the debt must be paid to get the discount.

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Paying the BillDiscounts – The debits and credits

The creditor is debited (reduced) with the full amount of the discount.

Discounts Taken (revenue) is credited (increased) with 10/11ths of the discount.

GST Paid (asset) is credited (reduced) with 1/11th of the discount.

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Paying the BillProcedure

Click Pay Bills in the Command Centre.

Select the Supplier.

Insert the date and amount details.

Locate the bill being paid.

Insert the discount amount.

Press Tab twice.

Record.

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Paying the Bill

Insert the Date and Cheque Amount.

Insert

Insert the Discount amount.

Insert

Then click Record.

Click

Click in Amount Applied.

Click

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Historical PurchasesBackground.

Purchases that took place before the start of this set of books are known as Historical Purchases.

Each bill is entered separately.

The sum total of these bills must equal the balance of the Accounts Payable control account in the General Ledger.

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Historical PurchasesProcedure.

1. Setup (in the top menu bar).

2. Balances (in the drop-down menu).

3. Supplier Balances (in then next menu).

4. Add Purchase (button at base).

5. Select the supplier (from the list).

6. Insert the details.

7. Record.

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Historical Purchases

Insert the details.

Then click Record.

Click

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Returns and DebitsAccounting background.

Faulty stock returned to the supplier reduces the quantity on hand.

– This is a credit to the Purchasesaccount.

– It is a credit to the GST Paid account.

Returns to a supplier reduce the debt owed for the goods.

– This is a debit to the Account Payable.

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Returns and DebitsProcedure

1. Create a Negative bill (where all costs are entered as Minus amounts). Record.

2. Go to the Purchases Register.

3. Locate your negative bill in Returns and Debits.

4. Reduce the original bill by this debit amount. Record.

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Returns and DebitsThe Negative Invoice

Insert the amounts as Negatives.

Minus

Then click Record.Click

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Go to the Purchases Journal

Select Returns & Debits

Returns and DebitsThe Purchases Register

Click

If nothing appears, you

forgot the minus signs.

In that case, make the

correction in the Journal.

Then click Apply to

Purchase.

Click

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Returns and DebitsSettle against the original bill.

Insert the details.Insert

Delete any discount.

Click in Amount Applied.

Click

Then click Record.

Click