Accounts Payable Transaction
Processing
Part 1
Slideshow 4A
List of Topics
Slide No.
The ACCOUNTS PAYABLE Module (Review)
GAAP Related to Accounts Payable
3
Matching Principle
Objective Evidence Principle
Unit of Measurement Concept
Cost Principle
Processing Vendor Invoices
4
5
6
7
8
Invoices with GST and PST
Invoices with Taxes Included
Using Distribution Set on an Invoice
Processing Credit Notes and Debit Notes
10
11
12
13
Processing Adjustments
Recurring Payables
15
17
The ACCOUNTS
PAYABLE Module
Click and review the types of
transactions processed in the A/P
Module that you learned in the last
chapter.
Click to continue.
Types of Transactions in A/P Module
•
Purchases
•
Debit/Credit notes
•
Adjustments
•
Payments/pre-payments to vendors
•
Cash disbursements, monthly
payments
•
Tax remittances
GAAP Related to A/P:
Matching Principle
In the next few slides, review
GAAP principles you have already
learned and study new ones that
apply to Accounts Payable.
Click and study the first principle and
example below it.
Click to continue.
Matching Principle
Expenses are matched with revenues in the
period when efforts are made to generate the
revenue.
Example
An accounting consultant, Faye Anderson,
bought $600.00 worth of paper and printing
supplies in December. She collected $2,800.00
consulting fees from her clients that month.
Faye entered $600.00 for paper and printing
supplies as prepaid asset.
At the end of the month, she calculated that she
used up $285.00 worth of the supplies she
purchased earlier. When Faye prepares her
monthly financial statement for December, she
should report the $2,800.00 revenue and her
expenses to earn the revenue, including $285.00
(not $600.00) for supplies.
GAAP Related to A/P:
Objective Evidence
Principle
Objective Evidence Principle
Click and review the principle and
example.
Click to continue.
Each transaction is described by a business
document that proves the transaction did
occur.
Example
A business transaction should be recorded only
if it actually occurred. The amounts recorded
must be accurate and true.
One way to check the accuracy of specific
accounting information is to look at the source
documents, such as:
• Sales invoices for goods/services sold.
• Cheques for payments received.
• Deposit slips for funds deposited in the bank.
• Memos and other supporting forms.
GAAP Related to A/P:
Unit of Measurement
Concept
Unit of Measurement Concept
Click and study the concept and
example.
All business transactions are recorded in a
common unit of measurement – the dollar.
Click to continue.
Example
In order to be clear, business transactions
must be recorded in a consistent manner
using dollar values. Count of items, such
as 100 units or 1 dozen, is not a good unit
of measurement.
GAAP Related to A/P:
Cost Principle
Click and study the principle, then
read the example below it.
Click to continue.
Cost Principle
All assets purchased must be recorded
in the company accounting records at
their purchase price (historical cost).
Example:
A computer bought for $3,000 is
recorded as an asset at the time of
purchase. If the value of that same
computer decreased in price to $2,500
shortly after purchasing it, the value in
the accounting records remains the
same. Any change in the market value
of the asset does not get reflected in the
accounting records.
This principle is followed even when the
value of the asset increases.
Purchase Journal
Entries
When goods you ordered are
delivered, the vendor sends you
an invoice.
Click.
On the back of the invoice, you
would stamp the date when the
invoice was received.
Click.
After inspecting the goods,
somebody would approve the
invoice, indicating the date and
account number to which the
shipment should be recorded.
Click.
Now there are three dates.
Question: Which date should you
use as the transaction date?
Click to find the answer.
Click to continue.
back
Received
04/08/2010
Processing Vendor
Invoices (continued)
COLLEGIATE, our sample
company, receives invoices from
vendors for purchases on credit.
The invoices are batched and
entered on Thursday of every
week.
Click.
Each vendor invoice is a separate
entry in a batch.
Study the DOCUMENT page of
the A/P invoice entry as it relates
to the vendor invoice.
Click the other tabs on the A/P
Invoice Entry screen from left to right
starting from TAXES.
Notice that on the TOTALS page,
Discount Amount is applied.
When finished, click to continue.
Discount amount is based on invoice subtotal (without
taxes), TERMS of purchase and the invoice date.
Processing Vendor Invoices
(continued)
Invoices with GST and
PST
The invoice in the previous slide
has only GST because it is for a
purchase of merchandise for sale.
Purchases of supplies for the
company’s use and NOT for
resale are subject to both GST
and PST.
GST is recoverable, but not PST.
PST is added to the amount of the
expense, becoming part of the
cost. ACCPAC automatically
distribute the amount of PST to
the same account as the amount
of the purchase.
Click and study a sample of the
invoice entry for a purchase with
both GST and PST. Study the
DOCUMENT page, then advance to
the other tabs, as usual.
Study how the invoice is
recorded in the G/L. Notice that
PST is recorded in OFFICE &
GENERAL EXPENSE.
Click to continue.
Discount is calculated according to TERMS
of purchase, based on the Discount Date.
Processing Vendor Invoices
(continued)
Invoices with Taxes
Included
Most commercial invoices show
the amount of taxes separately
from the amount of the purchase.
However, occasionally invoices
may have taxes included in the
total amount. ACCPAC can
automatically calculate what to
record in the tax accounts and the
purchase accounts.
Study the invoice at the right.
Study the invoice entry for an
invoice with GST included. Study the
DOCUMENT page, then advance to
the other tabs, as usual.
ACCPAC will automatically calculate tax as long
Discount is calculated if
as CALCULATE is selected and YES is selected
applicable.
for TAX INCLUDED.
GST is recorded as
RECOVERABLE TAX.
Your text will give you step-bystep instructions.
When finished, click to continue.
Double-click NO to change to YES.
Processing Vendor Invoices
(continued)
Using Distribution Set
on an Invoice
When you set up the A/P Module
earlier, you defined the
Distribution Set ADVERT.
Remember that distribution sets
are used to distribute an invoice to
two or more Distribution Codes.
Using ADVERT on an invoice will
instruct ACCPAC to use the
Distribution Codes ADPROD and
ADSERV.
Click.
Study the invoice at the top right.
Notice the special note that $500
should be charged to the Service
Department and $1,500 to the
Product Department.
Click and study the DOCUMENT
page of the invoice entry then click
on the other tabs from left to right.
Your text will give you step-bystep instructions.
When finished, click to continue.
Processing Credit Notes
and Debit Notes
Study the difference between a
credit note and a debit note.
Click.
Debit and credit notes are
recorded in an Invoice Batch
similar to a regular invoice.
Credit Note or Debit Note is
selected as the Document Type
on the Document Page.
Click and study the Credit Note on
the top right and the DOCUMENT
page of the invoice entry.
Study the invoice at the top right.
Notice that GST is included. Also
notice that although it is an
Invoice Entry screen, the TERMS
tab is not available, since you
selected CREDIT NOTE as
Document Type.
Click on the other tabs from left to
right.
Your text will give you step-bystep instructions.
When finished, click to continue.
Difference Between a Credit and a Debit Note
Credit Note: A document received by the company
from a vendor which in effect decreases the amount of
the vendor invoice which therefore decreases the
company’s Accounts Payable (e.g., purchase return). It
is called a credit note because it decreases the
vendor’s Accounts Receivable (a credit in the vendor’s
accounting records).
Debit Note: A document received by the company
from a vendor which in effect increases the amount of
the vendor invoice which therefore increases the
company’s Accounts Payable (e.g., additional charges
on goods purchased). It is called a debit note because
it increases the vendor’s Accounts Receivable (a debit
in the vendor’s accounting records).
Processing Credit Notes
and Debit Notes (continued)
Study the Debit Note on the top
right and the DOCUMENT page of
the corresponding invoice entry
below it.
Study the batch entry below.
DEBIT NOTE is selected as
Document Type. Like in a Credit
Note, there is no TERMS page.
Notice that only GST is charged.
Click on the other tabs from left to
right.
Your text will give you step-bystep instructions.
When finished, click to continue.
Processing Adjustments
After an invoice has been posted.
You may find that a mistake has
been made and a correction is
required.
Click and study the common
mistakes that can be easily corrected
by making adjustments.
If you have posted a transaction to
the wrong vendor or you have
selected the wrong document
type, you can enter an
adjustment making the original
invoice amount to zero. You can
then make the correct entry to the
proper vendor or select the proper
document type.
An incorrect document date or an
incorrect purchase terms cannot
be fixed using an adjustment. The
A/P Control Payments window,
which you will study in the next
slideshow, may be used to change
the due date, the discount date or
the discount amount.
When finished, click to continue.
Common mistakes corrected with
adjustments:
•
Incorrect amount.
•
Incorrect taxes.
•
Incorrect coding or distribution.
Processing Adjustments
(continued)
Adjustments may be done in
either of two windows:
• A/P Adjustments window.
• A/P Payments window.
You can use the A/P Payments
window during the application of a
payment to an invoice. You will
now learn how to use the A/P
Adjustment window.
Adjustment Entry
Click and study the memorandum
and the original invoice to which it
refers.
Click again to see the adjustment
entry to make the correction.
Review the required adjustment
again. PROD is entered in the
Adjustment Entry for Distribution
Code (see how you defined it
earlier). This redistributes
AMOUNT to two G/L accounts
instead of one.
Click to continue.
Original Entry
Recurring Payables
A payment made on a regular
basis; e.g., rent, equipment
leases, etc., can be recorded as a
Recurring Payable.
1.You need to set up a Recurring
Payable Code.
2.You can then create a Recurring
Payables Batch to process the
payment when due.
2
Using the Recurring Payable
Code in the Recurring Payables
Batch saves you entry time and
avoid errors.
Our example is a Recurring
Payable for monthly rent of $800.
Click to continue.
MONTH1ST
You have set
up earlier in
Common
Services
SCHEDULING
1
More…
Go back to your text and proceed
from where you have left off.
Press ESC now, then click the
EXIT button.
EXIT