Periodic Accounting Tutorial

Overview#

• Periodic accounting is an approach where financial records and transactions are organised and reported over defined periods, such as monthly, quarterly or annually.
• The goal is to assess the financial performance of an organisation over these intervals.
• With periodic accounting, it is necessary to provide for all transactions in the correct month, whether invoices are received.

💡These tutorials explain how to create transactions to comply with periodic accounting.

Understanding Periodic Accounting#

• Periodic accounting is the process of providing for transactions in the period in which they were incurred.
• Transactions are moved using:
  • Accrual Accounts (current liabilities) to provide for costs.
  • Prepaid Accounts (current assets) to remove costs that were paid in advance.
• The entries required depend on the QuickEasy BOS Professional features an organisation is using, and whether Customer and Supplier transactions are integrated into the Ledger.

For example, an organisation bought R2000 worth of paper from a VAT-registered supplier.

Accounts are not Integrated#

The entries when materials are brought into inventory are:

When an invoice is received, a bookkeeper must enter it as follows:

Moreover, the Accrual Accounts must be reconciled to ensure that all the Invoices were received. 

Accounts are Integrated#

The entries when materials are purchased:

How to Create Accrual Accounts#

1. Navigate to Main Menu > Setup > Accounting > Statement of Financial Position > Liabilities + Equity > Liabilities.
2. Right-click Current Liabilities and select Add.
3. Add the following Accounts and whichever other accounts you might need:
   • Accrual - General Expenses
   • Accrual - Payroll Expenses
   • Accrual - Cost of Sales (Cost of Sales can be divided into sub-accounts such as Raw Materials, Finished Goods and Consumables)

How to Create Prepaid Accounts#

1. Navigate to Main Menu > Setup > Accounting > Statement of Financial Position > Assets.
2. Right-click Current Assets and select Add.
3. Add the following accounts and whichever other accounts you might need:
   • Prepaid - General Expenses
   • Prepaid - Other

Understanding Entry Dates#

When you enter a transaction you see two dates: a Transaction Date and a Period Date.

• The Transaction Date is the date on the invoice, or if you do not have an invoice, the date on which you are recording the transaction.
  • Note: If you are providing for expenses, the Transaction Date is the last day of the Period.
• The Period Date is the accounting period to which the entry belongs.

How to Complete a Month in Periodic Accounting#

1. Check that all the Invoices are entered.
2. Do a Bank Reconciliation.
3. Do a VAT Reconciliation (if applicable).
4. Enter adjusting entries for Cost of Sales and Stock if your accounts are not integrated (see below).
5. Look at the Statement of Profit or Loss (choose Fin Year (Months)) to see if any fields are empty and provide for those expenses.
6. Look at the Statement of Financial Position to see if it has any errors or accounts that must be reconciled and fix those issues.
7. Close the period: Main Menu > Accounting > Financial Close Off Date.

How to Create Accrued Transactions for Missing Expenses#

1. Navigate to Main Menu > Accounting > Ledger.
2. Click New (button).
3. Entry Types = Select General Journal.
4. Create the necessary journal entries as follows:
   • Dr = Expense Accounts (the Expense account that has a missing entry)
   • Cr = Accrual: General Expenses
     • Note: There is no VAT on this transaction because it is a provision.

How to Reverse Accrued Transactions for Missing Expenses#

1. You received an invoice that will be paid later:
   1. Navigate to Main Menu > Accounting > Ledger.
   2. Click New (button).
   3. Entry Types = Select General Journal.
   4. Create the necessary journal entries as follows:
      • Debit = Accrual: General Expenses
      • Debit = VAT
      • Credit = Supplier Account
2. You paid the invoice and want to record it as a cash or bank transaction:
   1. Navigate to Main Menu > Accounting > Ledger.
   2. Click New (button).
   3. Entry Types = Select General Expenses.
   4. Create the entry as follows:
      • Debit = Accrual: General Expenses
      • Debit = VAT
      • Credit = Bank Account

How to Reconcile Your Accrual Accounts#

1. Export the account you want to reconcile to a spreadsheet, like Excel:
   1. Navigate to Main Menu > Accounting > Ledger.
   2. Next to Filter, select General Ledger Account from the dropdown list.
   3. Navigate to the Account you want to reconcile.
   4. Click View (button).
   5. Click Menu (button) > Email Excel.
2. Delete all the entries that have a matching Debit and Credit counterpart.
3. Investigate the remaining entries and:
   • Reverse them if they were incorrectly entered, or
   • Enter the missing transactions.

How to Transfer Goods Used in Production to Cost of Sales#

1. Navigate to Main Menu > Suppliers > Supplier Invoices.
2. Select the Date next to Set = This Month.
3. If the WO No. field is hidden, navigate to the Field Chooser (*) and select WO No. to include it.
4. Click the Filter next to WO No. and select NonBlanks.
5. Click View (button).
6. Make a note of the VAT Exclusive Total at the bottom.
7. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Periodic - Accrual Inventory > Purchases.
8. Enter the value of Goods Used in Production (as per Step 6).
9. Select No VAT.
10. Click Done (button).

How to Transfer Goods Purchased for Customers to Cost of Sales#

1. Navigate to Main Menu > Suppliers > Supplier Invoices. 
2. Select the Date next to Set = This Month.
3. If the WO No. field is hidden, navigate to the Field Chooser (*) and select WO No. to include it.
4. Click the Filter next to WO No. and select Blanks.
5. If the SO No. field is not showing, click the Field Chooser (*) and select SO No..
6. Click the Filter next to SO No. and select NonBlanks.
7. Make a note of the VAT Exclusive Total at the bottom.
8. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Edit Periodic - Accrual Inventory > Purchases.
9. Enter the value (as per Step 7).
10. Select No VAT.
11. Click Done (button).

How to Transfer Finished Goods to Inventory#

1. Navigate to Main Menu > Suppliers > Supplier Invoices. 
2. Select the Date next to Set = This Month.
3. If the SO No. field is not showing, click the Field Chooser (*) and select SO No..
4. Click the Filter next to SO No. and select Blanks.
5. Make a note of the VAT Exclusive Total at the bottom.
6. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Edit Period - Accrual Inventory > Inventory Finished Goods.
7. Enter the value (as per Step 5).
8. Select No VAT.
9. Click Done (button).

How to Transfer Raw Materials to Inventory#

1. Navigate to Main Menu > Suppliers > Supplier Invoices.
2. Select the Date next to Set = This Month.
3. If the SO No. field is not showing, click the Field Chooser (*) and select SO No..
4. Click the Filter next to SO No. and select Blanks.
5. Make a note of the VAT Exclusive Total at the bottom.
6. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Periodic - Accrual Inventory > Inventory Raw Materials.
7. Enter the value (as per Step 5).
8. Select No VAT.
9. Click Done (button).

How to Transfer Inventory of Finished Goods to COS#

1. Navigate to Main Menu > Materials > Inventory.
2. Select the Date next to Set = This Month.
3. Add a Category using the Field Chooser (*) if it is not showing.
4. Click the Filter next to Category and choose Finished Goods.
5. Make a note of the VAT Exclusive Total at the bottom of the Value Issued column.
6. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Periodic - Inventory Finished Goods > COS Finished Goods.
7. Enter the value (as per Step 5).
8. Select No VAT.
9. Click Done (button).

How to Transfer Inventory of Raw Materials to COS#

1. Navigate to Main Menu > Materials > Inventory.
2. Select the Date next to Set = This Month.
3. Make a note of the VAT Exclusive Total at the bottom of the Value Issued Column.
4. Deduct the Finished Goods as calculated in the previous step from the Total. The difference is the Raw Materials.
5. Navigate to Main Menu > Accounting > Ledger, click New (button) > Select Periodic - Inventory Raw Materials > COS Raws.
6. Enter the number (as per Step 4).
7. Select No VAT.
8. Click Done (button).

How to Record an Inventory Gain or Loss#

If you complete a stock take and find a discrepancy, you can enter that discrepancy in the following way:

1. If your stock increased (you had a gain):
   1. Navigate to Main Menu > Accounting > Ledger > Click New (button) > Select Periodic - Inventory Gain.
   2. Enter the value of the stock increase.
   3. Select No VAT.
   4. Click Done (button).
2. If your stock decreased (you had a loss):
   1. Navigate to Main Menu > Accounting > Ledger > Click New (button) > Select Periodic - Inventory Loss.
   2. Enter the value of the stock decrease.
   3. Select No VAT.
   4. Click Done (button).

How to Record a WIP Decrease or Increase#

1. Navigate to Main Menu > Reports > Cost of Sales > Menu (button) > Items.
2. Select the Date next to Set = This Month.
3. Filter the Status to Production.
4. Make a note of the number at the bottom of the Purchases column.
5. Open the Statement of Financial Position.
6. Look for the number next to Inventory Work in Progress.
7. Calculate the change in Work in Progress by deducting the number in Step 6 from the number in Step 4.
8. If the number is positive:
   1. Navigate to Main Menu > Accounting > Ledger > Click New (button) > Select Periodic - WIP Increase.
   2. Enter the number calculated in Step 7.
   3. Click Done (button).
9. If the number is negative: 
   1. Navigate to Main Menu > Accounting > Ledger > Click New (button) > Select Periodic - WIP Decrease.
   2. Enter the number calculated in Step 7.
   3. Click Done (button).