Purchases - Multi VAT Invoice
THE PURCHASES MULTI VAT ENTRY IS USED TO RECORD PURCHASE INVOICES FROM SUPPLIERS.
THE MULTI VAT INVOICE ENTRY OPTION IS SIMILAR TO THE NORMAL PURCHASE BATCH ENTRY SCREEN EXCEPT THAT IT IS EXTENDED TO ALLOW THE USER TO APPORTION THE INVOICE ACROSS NUMEROUS PURCHASE OR EXPENSE ACCOUNTS AND / OR VAT RATES.
PURCHASES> MULTI VAT INVOICE ENTRY>
Select Invoice or Credit Note as appropriate. Once selected the program will automatically post the transaction in the appropriate manner.
This is the internal reference that will cross reference the physical invoice to the transaction entered on screen.
This is the suppliers invoice number as displayed on the invoice to facilitate future cross reference for any queries on the account and to reconcile the closing period balance to the statement.
Date of issue of the invoice as displayed on the invoice, this should not be doctored.
Select a Supplier name from the list of Suppliers (F2) who issued the invoice to you.
The narrative is an optional field and can be completed if required. The narrative will give further information in relation to the invoice / goods purchased.
Select the appropriate Purchase / Expense nominal account to which the purchase invoice relates, e.g. the Telephone Bill will be posted to the "Telephone and Fax" expense account.
If the Purchases are direct cost of sales / Purchases for Resale then choose the appropriate Purchases account as customised for the purpose of the business.
Purchases account at relevant VAT rate should be selected, these accounts should only be used to record Purchase for Resale, e.g. Purchases at Standard Rate.
Enter the NET Amount (purchase figure excluding VAT).
This differs to the Purchases Batch Entry option where the Gross figure was required to be entered. It also differs from the point of view that no distinction need be made between a positive figure for an invoice entry or a negative figure for a credit note entry, the user has already indicated to the program at the start of the transaction if an invoice or a credit note is being posted therefore only a positive figure need be entered at this point.
Type the appropriate narrative for each part of the purchase transaction entry as it appears on the invoice related to this line of entry e.g. brief description with batch number/purchase order number.
There is the option to add two more lines of entry to the transaction at varying VAT rates. There is no restriction to the mix of VAT used, i.e 3 lines of entry all at standard rate or one line at standard rate one line at low rate etc.
An example of an entry posted from the above transaction is :
Purchase Invoice received relating to the service of the business delivery van where Parts are for 100.00 net and Labour to the net value of 50.00.
Dr Motor Service & Repairs account 100.00 Net Amount P&L account Expense
Dr VAT account 23.00 VAT element reclaimable from Revenue Balance Sheet Receivable from Revenue
Dr Motor Service & Repairs account 50.00 Net Amount P&L account Expense
Dr VAT account 6.75 VAT element reclaimable from Revenue Balance Sheet Receivable from Revenue
Cr Trade Creditors account (179.75) Gross Amount Balance Sheet Payable to the Supplier
The profit and loss account (P&L) records the actual expense incurred by the company, therefore the P&L can only ever reflect a particular invoice once as the expense linked to this invoice is only incurred once.
The Balance Sheet (B/S) records amounts payable/receivable and amounts paid/received. In posting a purchase invoice the amount of the invoice is recorded as a payable so is therefore automatically posted to the “Trade Creditors” account which represents amounts payable to Suppliers.
In the above transaction the invoice relates to a purchase for resale (i.e. a direct cost of the end product sold) so this will be debited to the “Purchases at Standard Rate” account in the P&L, however as the business is VAT registered the business can reclaim the VAT element of the invoice from the Revenue therefore they are not actually incurring the full cost (Gross amount) of the invoice only the amount excluding VAT (Net Amount). The Net amount (excl VAT) is posted as the actual P&L expense and the VAT element is posted to the VAT account (B/S) as a debit meaning it is receivable from the Revenue.
The total Gross amount (incl VAT) is payable to the Supplier so this amount is posted to the Trade Creditors account as a credit as the full amount is payable to the Supplier.
The VAT report will capture the VAT element for inclusion in the appropriate VAT return.
N.B. Accounting works on a double entry basis and must always balance
P&L Expense Debit +
B/S Payable/Paid Credit -
P&L Income Credit -
B/S Receivable/Received Debit +