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This text refers to program version 4.3  

Transactions in FirstOffice - Purchase Invoices

Purchase Invoices are demands for your company to make payments. A Nominal Ledger Transaction created from a Purchase Invoice will normally affect three Accounts: the Creditor Account will be credited, a Purchase Account will be debited and, in most cases, the VAT Account will also be debited. Defaults for the Accounts affected are taken from the Account Usage P/L setting, and they are selected according to the priority rules described below.

Purchase/Cost Account
The Purchase Accounts (also known as Cost Accounts) in the Nominal Ledger are used to record the levels of purchases of different types of Items. When you enter Purchase Invoices, you should enter a Purchase Account in each row (in the column marked 'Account'). Different rows can have different Purchase Accounts.

FirstOffice can in some instances offer a default Purchase Account for the Account field in the first row of a Purchase Invoice. This will be taken from the Cost Account specified on the 'Account' card of the Customer record for the Supplier. You might specify such a default for Suppliers of services (such as electricity or telephone services), whose Purchase Invoices are always posted to the same Account.

VAT Account
When you enter a Purchase Invoice, you must specify a VAT Code in each row. This code refers to a specific VAT Code record, which will determine the Input VAT Account in the subsequent Nominal Ledger Transaction and the rate at which VAT will be charged. VAT Code records are set up using the VAT Codes setting.

When you enter Purchase Invoice rows, you cannot leave the VAT Code field (marked 'V-Cd') blank. The default is placed in this field as follows:

1. FirstOffice uses the VAT Code specified for the Accounts. If this is blank:
   

2. The VAT Code specified in the Account Usage P/L setting is used.

If the selected VAT Code is missing from the VAT Codes setting, FirstOffice will display the error message: "Code not registered".

Creditor Control Account
When a Nominal Ledger Transaction is generated from a Purchase Invoice, the Creditor Account is taken from the Creditor (or, if the Invoice is a cash Invoice, the Cash) Account entered in the Account Usage P/L setting.

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