Recording cash transactions from the Sales and Purchase Ledgers in the Nominal Ledger - Double Transaction Method
This page describes using the Double Transaction method to record cash transactions from the Sales and Purchase Ledgers in the Nominal Ledger. Please refer
here for details about the Single Transaction method, and
here for an introduction.
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If you are using the Double Transaction method, your cash transactions will be recorded in the Nominal Ledger through the Transactions that will be created both from Invoices and Purchase Invoices and from the Cash In and Cash Out records that you create from these Invoices. Records that you enter directly to the Cash In and Cash Out registers with no related Invoice will also generate Nominal Ledger Transactions. This system might be suitable where invoicing and cash handling are carried out in a different offices or departments.
To set up a Double Transaction system, follow these steps:
- In the Sub Systems setting in the Nominal Ledger, ensure the Invoice, Purchase Invoice, Cash In and Cash Out options are selected.
- In the Cash Book module, select the Cash Collection option in the Cash Book Settings setting, but do not select the Payment Mode Control option.
- Again in the Cash Book module, enter one Payment Mode. Set the Type to "Cash" on flip B. In the N/L column on flip C, choose "Generate Transactions". The Account should be the Cash Account.
- Enter one Payment Term record in which the Type is "Cash" and with a temporary holding Account specified in the Cash Account field. You can do this using the setting in the Sales or Purchase Ledgers.
- Enter one Expense Account in which the Account is the temporary holding Account specified in the Payment Term record. You should do this using the setting in the Cash Book module.
- If you have more than one Cash Account, repeat steps 3, 4 and 5 for each one.
- When entering a Cash Invoice or Purchase Invoice, enter the appropriate "Cash" Type Payment Term. When you mark the Invoice as OK and save, it will be treated as paid. There will not be a posting to a Debtor or Creditor Account, but instead there will be one to the temporary holding Account from the Payment Term.
- After marking the Invoice as OK and saving, you can create a Cash In record (in the case of an Invoice) or a Cash Out record (in the case of a Purchase Invoice) from it by selecting 'Cash In' or 'Cash Out' from the Create menu.
Specify the appropriate Payment and Expense Accounts in these Cash In and Cash Out records. When you mark them as OK and save, Nominal Ledger Transactions will be generated, moving the amounts out of the temporary holding Account and in to the Cash Account specified for the Payment Mode. If you only have one Payment Mode and one Expense Account, you can specify in the Cash Book Settings setting that they will be offered as defaults in these Cash In and Cash Out records.
- If you need to enter a cash transaction that has no stock implications, you can enter it directly to the Cash In or Cash Out registers. You will probably need a separate Expense Account for this purpose. When you mark the record as OK and save, a Nominal Ledger Transaction will be generated.
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Integration with the Sales and Purchase Ledgers, including:
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Integration with the Sales and Purchase Ledgers
