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money in, money out, sales, purchases - whats the differance?

Question asked by gary wyatt-williams 6 months ago

Hi

Could someone please explain the difference between money in and out in the bank account section, compared to sales and purchases. we have been putting our bills through the purchases and all income, including vat refund and tax refund through sales, now we are not sure if this is correct.

many thanks lisa

8 Replies

You can do a Money in (resulting as an invoice), click on the Refund tab and use the VAT control account which would use the VAT rate, Exclude from VAT return

Money in/out first creates the payment and then that payment can be allocated to either an existing invoice/bill or prompt an allocation to a system-created invoice/bill.

Invoices and bills are created in Sales and Purchases. They need payments to be allocated to them.

It doesn't seem like you're doing anything incorrectly at the moment. Just remember that all invoices and bills need to have payments allocated to them and there are multiple ways to do that. Money in/out is one of them, explaining from a bank statement is another, Quick pay is yet another...

thank you Aran, thats good to hear, i was worried I would have to restart everything. As far as our vat and tax refund being entered, what should these be entered as? (currently putting them in through sales but we were worried about being re-taxed on them if it is entered as invoices for money going in or will the fact that I have selected them to be exempt from tax suffice? many thanks lisa

or should they be entered as money in and then explain them as a refund?

You can do a Money in (resulting as an invoice), click on the Refund tab and use the VAT control account which would use the VAT rate, Exclude from VAT return

Thank you aran, iv successfully added the vat refund as u described under the vat control account. however when it comes to the tax refund, im putting it through the same but im struggling to choose which account to add it to. many thanks

Gary, do you mean Corporation tax or income tax?

Hi Gary,

It is probably best to create a new account for that, but you should also get the advice of an accountant on where to add the account if you are unsure.

How to add new account codes

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