When the business is paying subcontractors, suppliers or councils, etc for expenses related specifically to a job.
When arising purchase orders and invoices - if a General Ledger (GL ) code is used - the cost will be reflected in the expense account in the Profit and Loss (P&L).
When the job is invoiced, if full detail is used to be able to show the client the details of the charges – the sales will credit the same expense account.
This will mean that Income is understated, and the direct Expenses are also seriously understated.
It is recommended to create Product codes for each of the GL expense accounts that can be used for jobs; assign the product type as disbursement – to separate it from
Products and Labour charges on the Job Management reports – and then select Full Detail for the disbursement costs when invoicing.
On the Product Code the Purchase GL account will be the expense account and the Sales Account will be one of the Income accounts
Samples and an example below:
The invoice journal will be similar to this – assuming no location or product group settings control the sales GL codes used.
Comments
0 comments
Please sign in to leave a comment.