Processing Account Lines
Accounting allows you to process certain charges that do not form part of your main trading activities by selecting an applicable account when processing customer and supplier documents.
The reason for this is because not everything a supplier charges can be considered to affect the cost of an item for example, interest on an overdue account. Similarly, not everything a customer is charged for forms part of the main trading activities of the business, for example, delivery charges.
The next question is, how do you know when to create and process to an account or when to create a certain charge as an item or service item?
Let us look at different scenarios using the customer example of the delivery charges:
Scenario 1: If your business does not usually deliver goods to customers, you will create an account called delivery charges and assign it to the Other Income Category. You will then select this account when processing occasional deliveries to customers. This delivery charge will be recognised as an additional income to the business and will reflect separately in the Profit and Loss Report under the other income section.
The following screen demonstrates how you would process the scenario using the account option:
Scenario 2: If your business does deliver goods to customers as a service and it forms part of your business’s daily trading activities, then you will create a service item called delivery charge. This, in turn, will form part of your Sales account and will reflect in your Profit and Loss Report. This amount will be included in the Sales section of the Profit and Loss Report and will not reflect as a separate account.
The following screen demonstrates how you would process the scenario using the service item option:
If you want to add a note to the line, click on the + sign on the left hand side of the line. A box will display. Click inside the box and enter your note or message.
The way in which you process additional income or expenses using account lines will be the same for customer invoices, customer returns, supplier invoices and supplier returns.