The developers of Sage 50 understand that each business is different and have designed Sage 50 and its various versions to accommodate the evolving requirements of small businesses.
Objectives
- An understanding of the common terms used in accounting;
- What is a Chart of Accounts and what are the benefits;
- How to create, copy, modify, review and print the Chart of Accounts;
- How to add and delete charts in the Chart of Accounts;
- Learning about the errors that may occur whilst creating charts and how to check for them.
6.1 Introduction
An account is a unique record for every transaction, such as assets, liabilities, equity and revenue.
A Chart of Accounts is an organisational tool that helps provide a comprehensive and complete listing of every account in the company system.
Before going on to examine the methods of creating and modifying a Chart of Accounts in Sage 50, it is important to understand the meaning of common terms used in the field of accounting.
A well-designed and complete Chart of Accounts is important to a business for a variety of purposes. Businesses are able to gauge their financial health at a glance and can make effective decisions based on the information contained in the Chart of Accounts
The user can add, modify or delete a Chart of Accounts. Module 6 explains these processes in detail.
The Chart of Accounts includes different default category types, such as sales, purchases, direct expenses, assets, liabilities, capital and reserves. The user can enter or amend the category accounts under each type.
6.2 What is a Chart of Accounts and why is it required for every Business?
A Chart of Accounts is a complete listing of every account in the company system.
It is a list of every account that the business or company has identified for posting in the general ledger.
The underlying purpose of a Chart of Accounts is to track the level of detail established in the company accounting system.
Sage 50 is designed to automatically create a Chart of Accounts, once the company has been created and the type of business has been specified. Most of these automatic formats will correspond with the requirements of your company, but sometimes the user may have to modify the Chart of Accounts, in order to match their business needs.
6.3 Understanding Terminology in the Field of Accounting
In order to understand how to create and modify a Chart of Accounts you need to gain an understanding of some important terms commonly used in the field of accounting.
An account refers to a record in the general ledger that is used to store and collect similar information.
For example, a company that sells goods or merchandise on credit to another company will have a Sales Account or Account Receivables Account. Similarly, a Cash Account will contain details of transactions involving cash.
Accounting records include all the books and documentation that are utilised in the preparation of financial statements that are further used for reviews and audit purposes.
Accounting records include a comprehensive range of transactions, including assets and liabilities, monetary transactions, ledgers and journals. Cheques and invoices are also included in accounting records.
All accounts maintained by the company should be supported by full and detailed records that clearly indicate business expenditure.
A general ledger is a record or account that is used to store information regarding income statements and balance sheets.
Examples of general ledger accounts involving asset accounts include:
- Cash
- Accounts receivable
- Inventory
- Equipment
- Investments
- Land
Similarly, general ledger accounts consisting of liability accounts include:
- Accounts and notes payable
- Customer deposits
- Accrued expenses
- Interest expense
- Losses incurred in the disposal of assets
In the day-to-day running of the business, the Chart of Accounts is the foundation of the business financial system structure. Generally speaking, it will contain the names of all the different accounts, along with brief descriptions and unique identification codes.
The accounts within a Chart of Accounts will typically be listed in the same order in which they would appear on financial statements. Usually, balance sheet accounts are listed first, followed by accounts of the income statement.
Here is a rough format of a typical Chart of Accounts:
Balance Sheet Accounts Assets
Liabilities
Owners’ equity
Income Statement Accounts Operating expenses
Operating revenues
Non-operating revenues and gains
Non-operating losses and expenses
6.4 The Importance of a Chart of Accounts: Why does Every Business Need One?
A well-structured and accurate Chart of Accounts is important for any business for the following reasons:
- A Chart of Accounts helps get an idea of the business’s financial health at a glance because the assets, liabilities, revenues and expenses are all listed and described in brief;
- It helps businesses comply with financial reporting standards stipulated by the UK government and HMRC;
- A well-designed Chart of Accounts helps provide information to the management, to enable efficient decision-making.
In addition, the size and complexity of the Chart of Accounts for every business and company will vary depending on the size of the business. Whilst a small business may have about a hundred accounts in the Chart of Accounts, a medium or large business may have as many as a thousand accounts.
Similarly, a company’s organisational structure serves as a reliable reference for designing the Chart of Accounts.
For example, if a business is divided into five divisions, such as design, production, marketing and human resources, each department will have its set of expenses for which to account. Examples of such expenses include salaries and phone expenses.
Every business enjoys the flexibility of customising the Chart of Accounts, to suit its own unique requirements.
For example, operating revenues and operating expenses may be broken down further, according to company divisions and/or business functions. Different business functions could include production, selling, financial and administrative aspects.
In the Chart of Accounts, each account is identified by a unique number and name. Account numbers may consist of five or more digits whereby one or more digits will represent each division of the company, department, account type and so on. The first digit is often used to indicate whether the account is an asset or a liability.
For example, if the first digit is a ‘1′, the account may refer to an asset, ‘3′ may refer to a revenue expense whilst ‘5′ may indicate an operating expense. Hence, by looking at the Chart of Accounts, employees and managers are able to gauge the financial health of the business.
6.5 Steps to Create a Chart of Accounts in Sage 50
Sage 50 uses the layouts in the Chart of Accounts, to establish the codes to be included in the different sections of profit and loss, previous budget reports and the balance sheet.
This ensures that annual year-end accounts and management reports are accurate.
Default Categories included in the Chart of Accounts:
Profit and Loss Category
Sales:
The sales category groups together all the revenues coming into the business, such as interest and sales. This category could include:
Direct sales
Export sales
Sale of assets
Late payments/credit charges
Other sales
Purchases:
The purchase category groups together all the purchases related to trading, such as stocks. This category could include:
Purchase charges
Stocks
Direct expenses:
The direct expenses category groups together the expenses associated with the sales process. This category could include:
Commissions
Labour
Sales promotions
Miscellaneous expenses
Overheads:
The overheads category groups together the expenses that are not directly related to the cost of sales. Overheads will normally have to be paid regularly, usually on a monthly basis, regardless of business performance.
This category could include:
Rents and rates
Gross wages
Light, heat and power
Travelling and related expenses
Leisure and entertainment
Maintenance
Bank charges and interest
Bad debts
Depreciation
Balance Sheet Categories
Fixed assets:
This category groups together the fixed assets of the business. A company normally owns and uses fixed assets in the revenue generation process, and this includes tangible, long-term assets, as well as intangibles, such as patents, copyright and trademark.
Fixed assets are not intended to convert into cash for at least one year’s time.
This category could include:
Plants and machinery
Property
Furniture and fixtures
Office equipment
Vehicles
Land
Depreciation of fixed assets:
This refers to the loss of value over time. This is why the depreciation of each fixed asset is indicated on the balance sheet.
Current assets:
Current assets include assets that can be converted into cash within the space of one year. They are usually used to fund daily business operations and have a short life.
This category could include:
Debtors
Stock
Bank accounts
Deposits and cash
Prepaid expenses
Inventory
Marketable securities
Current liabilities:
This category groups together liabilities that must be paid in the near future. They generally include financial obligations and debts that need to be settled within one year’s time.
This category could include:
Payments to creditors
Wages
Taxation
Credit cards
VAT liability
Short-term loans
Long-term liabilities:
This category groups together all the liabilities that are not due for the next year. Long-term liabilities are also known as noncurrent liabilities or long-term debt. This category could include:
Long-term loans
Debentures
Pensions
Tax obligations
Capital and reserves:
This category groups together all the accounts in capital reserves that show how the business or company is being financed.
This category could include:
Information on share capital
Capital introduced through investors, etc.
Accumulated profit and loss
Unused reserves.
FACT
HMRC plans to transform the tax payment process into a completely digital process, in order to make tax payments simpler and more convenient for business taxpayers.
Source: gov.uk
The Different Sections Pertaining to the Chart of Accounts – 1m 28s
6.6 Setting Up the Chart of Accounts in Sage 50
Sage 50 offers different options for the Chart of Accounts for different organisations.
Use the Active Setup Wizard to select the one that you want. For more details on how to use the Active Setup Wizard, please refer to Module 3.
The user will have to review and modify the selected Chart of Accounts if necessary, to ensure that it suits the requirements of the business.
Here is how the user can add a Chart of Accounts:
Click on ‘Nominal codes’ then ‘Chart of Accounts’. Once you are in the Chart of Accounts, click on ‘Add’ and enter a name for the chart of accounts, then click on ‘Save’.
Tip 1: For users who wish to produce multiple Profit and Loss reports, it is possible to add more than one Chart of Accounts using Sage 50.
Tip 2: To delete a line, press F8 and, to add a line, press F7.
By default, the Chart of Accounts provided in Sage 50 is divided into categories. For Profit and Loss reports, these include sales, purchases, direct expenses and overheads. For balance sheets, they include fixed assets, current assets, current liabilities, long-term liabilities and capital and reserves. All the different categories have been explained in detail in the previous section.
Note: If the user has opted to create a customised Nominal code structure using the Active Setup Wizard, the Chart of Accounts will not contain any default categories.
Each category will contain the following details which can be amended by the user:
Description:
This is the heading for each category. The description appears on the financial reports and can be amended by the user.
Category Accounts:
Each category can be subdivided into a maximum of eight category accounts. For example, the sales category can be subdivided into product sales, export sales and home sales. Each heading can be a maximum of sixty characters.
Low/High:
This refers to the range of nominal codes to be used for each category account. If a category account only has one code, enter the same code in the low and high boxes. If there are multiple nominal codes, enter the lowest one in the ‘low’ box and the highest one in the ‘high’ box.
Floating nominal accounts:
There are certain records that could be categorised as assets or liabilities, depending on the balance. Such records are known as ‘Floating nominal accounts’. The ‘Floating nominal accounts’ heading only appears if the user is editing the ‘Current liabilities’ and ‘Current assets categories’ in the Chart of Accounts.
When a report is generated, Sage 50 automatically updates the total balance of the floating nominal accounts to the correct side of the balance sheet. In order to take advantage of this feature, add the floating nominal accounts to the boxes provided in the current assets and current liabilities categories.
Whenever you enter a description of the nominal account in one category, the software will prompt you to copy it to the other category. Click ‘Yes’.
All the nominal accounts that have been included will be added to give a subtotal to the category heading to which they belong.
6.7 Steps to Edit the Chart of Accounts
The Chart of Accounts can be edited by adding new categories or amending existing categories, to include suitable information.
- Select ‘Nominal codes’, then ‘Chart of Accounts’.
- Select the specific Chart of Account that you wish to edit and click on ‘Edit’.
- The Edit window will now appear on the screen. Select each category individually and enter or amend details, for example, description, low/high, floating nominal accounts.
Common Errors found in the Chart of Accounts
This means that the Nominal codes entered, either in the low box or high box or both, overlap with another set of codes in the category accounts.
In order to rectify this error, the user needs to amend the nominal ranges entered for the category.
- Nominal code range overlap
- Nominal codes are not represented in the Chart of Accounts
This error indicates that one or more nominal codes exist in the nominal ledger but are not included in the Chart of Accounts – they do not appear in the code range. The user can amend the category accounts to include the required Nominal code. Alternatively, if the nominal account is not going to be used, it can be deleted.
- The Nominal code for ‘Floating nominal accounts’ has been used in one category (current assets/liabilities) but not in the other. When the Chart of Accounts correctly reflects a floating nominal account in both categories, it automatically decides where to place the balance, depending on whether the balance is a credit or a debit.
In addition to being present in both corresponding categories, the floating nominal account range must be the same in both.
For example, if the user has entered the ‘Bank Account’ range as 1300-1307 in the current asset category, the same nominal code range must be entered in the current liability category.
Steps to Copy a Chart of Accounts File
Every time you create a Chart of Accounts, it is stored under a new name under the ACCDATA folder. All the Chart of Accounts names are stored in the ACCDATA/category folder. Users have the option of copying the Chart of Accounts within the same company or across companies.
Copying a Chart of Accounts across companies:
- Click on ‘Nominal codes’ then ‘Chart of Accounts’.
- Highlight the chart and click ‘Copy’.
- Select the chart, click ‘Edit’ and rename the copied chart.
- Click ‘Save’.
Important Note: If the user makes any changes to the Profit and loss or Balance sheet description names, these changes are not automatically reflected in the copied Chart of Accounts. Similarly, changes are not reflected in the nominal list. Any changes have to be incorporated manually.
6.8 Steps to Add or Replace the Chart of Accounts across Companies
Step 1
Open the company in which you wish to add or replace the Chart of Accounts. Take a backup of the Chart of Accounts, as a precaution against losing information or the file.
Step 2
For Sage 50 versions 2015 or later (version 19 or above), click on ‘Nominal ledger’ then ‘Chart of accounts’
For Sage 50 versions 2013 and earlier (version 18 or lower), click ‘Company’, ‘Nominal Ledger’ then ‘Chart of accounts’.
Step 3
If the user wishes to replace an existing Chart of Accounts, select ‘Nominal codes, ‘Chart of Accounts’ then ‘Edit’, and save the relevant Chart of Accounts.
Tip: If you wish to create a new Chart of Accounts, select ‘Add’, ‘Enter a name’, ‘Add’ then ‘Close’.
Once the user creates a new Chart of Accounts, Sage 50 automatically updates the category .dta file, and this file does not need to be copied to the new company.
Step 4
Click on ‘Help’, ‘About’ then ‘Link to the data directory.
(For Sage 50 versions 17 and below, click on ‘Help’, ‘About’, ‘Systems Information’, ‘Directories’, right-click on the required Data directory then click ‘Open folder’.
Step 5
The user will now need to find the correct Chart of Accounts file number that is to be replaced. Users can find the Chart of Accounts file number by right-clicking each Chart of Accounts and selecting Properties. This will provide information regarding the date and time of the last modification.
Step 6
Open the company from which the required Chart of Accounts is to be copied. Select ‘Nominal Codes’, ‘Chart of Accounts’ then the relevant Chart of Accounts file number.
Step 7
Right-click to copy the required Chart of Accounts file. Paste the file onto the desktop and select ‘Rename file’.
Step 8
Right-click the Chart of Accounts file on the desktop and select Copy.
Step 9
Browse the ACCDATA file of the destination company (to where you wish to copy the file). When prompted to rewrite the old file, select ‘Yes.
Step 10
In order to verify the details, open both companies and check to ensure that the Chart of Accounts has been correctly replaced.
Steps to Copy a Chart of Accounts File Across Companies – 0m 58s
6.9 Steps to Copy a Chart of Accounts within the same Company
If users need to copy a Chart of Accounts within the same company, they should follow Steps 1 to 3 outlined below:
Step 1
Select ‘Nominal codes’ then ‘Chart of accounts’.
Step 2
Select the Chart of Accounts from which you wish to make a copy, then ‘Copy’ then ‘Edit’.
Step 3
Amend the Chart of Accounts title, then select ‘Save’ then ‘Close’.
6.10 How to Create a New Company that uses the same Nominal Codes and Chart of Accounts from an Existing Company
Step 1
Open the existing company and select ‘Settings’, ‘Configuration’, ‘Save as’, ‘Desktop’, ‘File name’, ‘Enter customconfig’, ‘Save’ then ‘Close’.
Step 2
Create a new company with the business type that you want. For multi-user environments, select ‘Help’, ‘About’ then ‘Link to the data directory’.
For single user versions, select ‘Nominal codes’, ‘Chart of accounts’ then ‘Edit’ and save the relevant Chart of Accounts.
Step 3
If the user wishes to use a predefined business type, select ‘Browse’, the .xml file created in Step 1, and create the new company in the standard manner.
By following steps 1 to 3, all the nominal codes and the default Chart of Accounts are copied over to the new company.
Steps to Review the Installed Chart of Accounts
Whilst the default Chart of Accounts is a good base structure, it is unlikely to meet all your business requirements on its own. In order to maximise the function, you may wish to consider tailoring the Chart of Accounts in the following manner:
The first step involves identifying the nominal accounts that you do not need in the Chart of Accounts.
For example, overseas entertainment may be a redundant account for your business. Once you have identified unnecessary accounts, you can delete them from the Chart of Accounts.
However, please note that Sage 50 has certain ‘control accounts’ that cannot be deleted. Please refer to the next section for further insights regarding control accounts.
Steps to Delete a Chart of Accounts
If the user finds that a Chart of Accounts is no longer in use, they can delete it from the list of charts. However, please note that you cannot delete a Chart of Accounts that is set as the current chart.
The following steps describe how to delete a Chart of Accounts:
Step 1
Select ‘Nominal codes’ then ‘Chart of accounts’.
Step 2
From the Chart of Accounts window, select the specific Chart of Accounts that you wish to delete.
Step 3
Click delete and you will be prompted to confirm if the Chart of Accounts should be deleted. If you wish to proceed with the deletion process, click ‘Yes. You will then be taken to the Chart of Accounts window.
If you have selected the wrong Chart of Accounts or do not wish to proceed with the deletion, click ‘No’. The selected Chart of Accounts will stay as it is.
6.11 A Note on Control Accounts
Control accounts are important because they allow the user to view at a glance the total balances for creditors, debtors and VAT amounts on purchases, etc.
The user does not need to calculate individual balances, in order to verify the total balances.
Sage 50 uses control accounts, to facilitate automatic double-entry posting.
Here is a list of default control accounts in Sage 50:
Sales Ledger Control/Debtors Control:
This total tells the user the amount owed to the business by customers. All customer transactions are posted to this account. For example, if the customer receipt is issued and recorded, Sage 50 will automatically credit the receipt amount to the debtors control account. Please note that this account code can only be changed when there are no transactions entered into it.
Creditors Control/Purchase Ledger:
This total indicates the total amount owed by your business to suppliers. Every time a supplier payment is recorded, Sage 50 will debit the total amount from the creditors control account.
Other control accounts include default bank control, VAT on purchases, VAT on sales, sales discounts, retained earnings, accruals, default sales, prepayments and bad debts.
Module Summary
The Chart of Accounts is a list of all the nominal accounts used by the company or business. The Chart of Accounts is central to the company’s accounting system and forms the basis of the financial structure. A well-structured Chart of Accounts is able to provide a summary of the company’s financial status at a glance. It also provides reliable information for decision making.
Profit and Loss reports, Balance sheets, Prior year reports and Budget reports are all produced based on the structure of the Chart of Accounts. The user is able to add, copy, modify, review or delete the Chart of Accounts. Each Chart of Accounts has default categories, including purchases, sales, direct expenses, overheads, assets, liabilities, capital and reserves. Each category type is further divided into category accounts, the details of which can be entered or amended by the user.
Examples of category accounts include details, such as description, category accounts, low/high range and floating nominal accounts. If a category account is not expected to be used, it can be deleted. However, certain control accounts cannot be deleted. Control accounts show the total balances for creditors, debtors, etc. at a glance.
Objectives
- How to enter nominal records;
- An introduction to the double-entry bookkeeping method;
- The importance of banking records in business;
- How to create, edit and delete bank records;
- How to enter cash receipts;
- What is a bank reconciliation and how to perform a bank reconciliation process on Sage 50
7.1 Introduction
Sage 50 stores all transactions in the form of records.
These include banking, customer, product and supplier transactions amongst others. These records are referred to as ‘nominal codes’. This module 7 will explain in detail the creation and setting up of records.
When the user defines the business type whilst creating the company, Sage 50 automatically creates a nominal ledger based on the business type. The setting up of the nominal ledger is only an automatic process if the user uses the Active Setup Wizard to create their company.
The user can also add customised nominal codes to the nominal ledger. However, each code must be correctly defined in the Chart of Accounts as explained in Module 6. An updated Chart of Accounts will ensure accuracy in management reports, including Profit and Loss report, Balance sheet, etc.
This module explains how to create, edit and delete bank records and also explains the importance of planning the nominal codes. Sage 50 provides default nominal codes for different aspects of business, but these codes can be amended by the user according to business requirements. Nominal codes that are not used by the business can be deleted.
Users will learn the importance of bank reconciliation and why reconciliation is necessary for effective business management. The automated features provided in Sage 50 allow for a quick, accurate and user-friendly reconciliation process.
7.2 How to Enter Nominal Records in Sage 50
There are three ways in which a user can enter nominal records:
- The user can enter details in a blank nominal record: add a nominal record. The steps to add a nominal record are outlined below:
- Select ‘Nominal codes’ then select the area where you want to place the nominal record.
- Click ‘New’ and the record window will appear on the screen.
- You can now view the balances for the previous five years. If you are a new user, the record window will display no previous year information.
- This step involves entering the information using the details tab. Use the list of default category account ranges provided by Sage 50 as described above. For example, if you wish to allocate a nominal code for a fixed asset, ensure that the code falls in the default range for fixed assets (0001-0999).
Tip: If you are entering a new nominal code (one that is recorded in the Chart of Accounts), the window will display a warning when the user moves the cursor out of the details tab. This reminds the user that the Chart of Accounts must be updated with the new code.
Name: Enter an account name. Please note that this account name will appear on financial reports, as well as on the window title bar.
To complete the creation of a new nominal record, select ‘Save’. If you wish to re-enter the details, select ‘Discard’. In order to return to the main nominal record window, press ‘Close’.
Nominal Records Graph Tab: This will show the monthly balances of each account in the form of graphs.
How to Enter Nominal Records in Sage 50 – 1m 01s
How to Edit Nominal Records in Sage 50 – 1m 53s
How to Delete Nominal Records in Sage 50 – 0m 53s
7.3 Nominal Record Activity Tab
Every time the user records a transaction (creates a new nominal record), the transaction is stored in a single list in the Nominal Record Activity tab.
This list also indicates the order in which the transaction was recorded in Sage 50. Thus, the user is able to view the transaction activity in a nominal account by selecting the Activity tab on the specific nominal record.
For example, if the user selects the Activity tab in the Debtors Control account, the window will split into two panes. The upper pane contains the header whilst the lower pane will show the transactions.
Nominal Record Memo Tab
The memo feature provided by Sage 50 allows users to create a memo for every account. The user can enter and store additional information regarding the account. Users can also attach electronic documents and filing system references using the ‘Document Manager’ feature.
How to Edit Nominal Records
Sage 50 provides a comprehensive list of default nominal record codes for every business type. Some of the names may not be suitable for your business requirement. In this case, select ‘Nominal codes’, then select the relevant account and click on ‘Edit’. Make your changes then click ‘Save’.
How to Delete Nominal Records
Highlight the record and press ‘Delete’. However, users should bear in mind that nominal records cannot be deleted if:
- The nominal record contains transactions for the specific record in question;
- The balance is not zero;
- The nominal record in question is a control account. See Module 6 for further information on control accounts.
Users may also choose specific filter criteria to display records. For example, you can view records over a specific time period. In addition, you can display nominal records, according to date range, transaction type or transaction number range.
In order to select filter criteria to display records, select ‘Custom range’ from the ‘Show drop-down list’ that appears, and complete the boxes required in the ‘Activity range’ window.
The transaction type is a read-only field that indicates the type of transaction that you have specified in the ‘Show drop-down list’ in the ‘Activity’ window.
For example, if the user has chosen to only display bank receipts, this field will show ‘BR’.
Users cannot directly change the data in this field. If you wish to amend the transaction type, you must reselect the transactions from the ‘Show drop-down list’ in the ‘Custom range’ window.
For example, the ‘Date’ field is a read-only field that displays the dates specified in the ‘Activity’ window. For example, if the user has entered 01/04/2011 to 30/04/2011 as the dates, only the records that fall within this time range will be listed.
Please note that the next time the user displays ‘Nominal records’, Sage 50 will use the same specified criteria. However, values entered in the ‘Activity Range’ will not be retained for future record displays.
O/S transactions:
This stands for outstanding transactions that have yet to be allocated or paid. Select the ‘Show drop-down list’ in the ‘Custom range’ window and tick the ‘O/S’ box. This field cannot be changed directly but can be amended by selecting the ‘Custom range’ option again and unticking the ‘O/S’ box.
Trans:
This indicates the range number of the selected transactions currently being viewed. If the user has not specified the transaction range from the Custom Range, the ‘trans’ box will show the first and last range number by default.
For example, if the transaction range is 1 to 2000, the ‘trans’ box will show 1 and 2000 as the first and last numbers respectively.
If you have opened more than one account and wish to switch between records, use the ‘Previous’ and ‘Next’.
7.4 The Importance of Banking Records for Businesses
The role of banks in the development of businesses cannot be emphasised enough.
Banks facilitate several processes such as money savings, payments to suppliers and vendors, fund transfers and so on. Banks are also extremely useful as businesses may require loans or a line of credit, in order to expand.
Inadequate bank record maintenance can lead to inaccurate accounting. This in turn may expose the company to litigation and punitive action. Accurate and updated banking records also help to achieve improved control over decision making.
All purchases, receipts, payments, etc. appear as banking records. A bank statement contains details of all bank transactions. The process of comparing the cash book with the bank statement and adjusting any differences between the two is called bank reconciliation. Most businesses reconcile their bank statements with their cash books on a monthly basis.
The following section explains how to create, modify and delete a banking record in Sage 50.
Step-by-Step Instructions on How to Enter Bank Account Records
Users should use the banking module in Sage 50 to create banking records (although bank accounts are nominal accounts). Select ‘New account’ from the banking module. Sage 50 uses the ‘Bank Record Wizard’ to help users create a new bank account. Alternatively, you can choose to select ‘Blank record’.
Click on ‘Bank accounts’ then ‘New’ from the drop-down menu.
Alternatively, users can click on ‘Bank account’, ‘New’ from the drop-down menu then ‘Wizard’.
How to Complete the Required Account Details, in order to Create a New Bank Record
- Enter the nominal code for the new bank account. To convert an existing nominal code into a bank code, click on Nominal code and press the ‘Tab’ key. When prompted to convert the code into a bank code, select ‘Yes’.
- Users can enter up to sixty characters as the bank name.
- From the drop-down list, select the bank account type. You can choose from:
- Cheque account: Sage 50 treats both banks and building societies as cheque accounts. Sage 50 offers three types of bank accounts. These include bank deposit account, bank current account and building society account. The user can edit the default bank accounts and enter the correct bank names and addresses.
- Cash account: Sage 50 provides a default ‘Petty cash’ account. The user can add cash accounts to suit their business requirements.
- Credit card account: Users can set up credit card accounts on Sage 50. The credit card account is provided by default; the user can add additional account.
Please note that, once the bank account has been saved, it cannot be changed once transactions have been entered.
- For users who choose ‘foreign trader’ account type, please enter the appropriate currency.
- Enter the current balance in the ‘O/B’ (Opening balance) box.
- Complete the ‘Minimum balance’ field with the number below which you do not wish the bank account to fall. In the event that the amount falls below the minimum balance, the account will be highlighted in red.
- If you do not wish to run the bank reconciliation option for the relevant account, tick the ‘No bank reconciliation’ box.
To enter bank details, click on the ‘Bank details’ tab, enter the address, reconciliation, etc. You can use the ‘Activity’ window to view bank transactions or the ‘Memo’ option to add information as explained above.
Steps to Edit a Bank Record
As the user views bank records that have already been created, it may be necessary to add information or rename them, to make them more meaningful and easier to understand. In order to edit a bank record, select the record, enter the required details and click ‘Save’.
If you wish to edit a default bank account, click ‘Settings’, ‘Control accounts’, ‘Default bank’, enter the new nominal code for the default bank then click ‘OK’.
To delete a bank record, press ‘Delete’. It is not necessary to open the banking module.
Please remember that banking records cannot be deleted if:
- There are transactions already entered;
- The balance is not zero;
- The bank account is also a control account.
How to Record Cash Receipts
- From the ‘Bank navigation’ window or ‘Customer & Sales’ navigation window, select the ‘Receive money from customer’ option from the drop-down list.
- Enter the Customer or Vendor ID, by clicking on the magnifying glass icon. If this is a new customer ID, leave the field blank, and do not click on the magnifying glass icon. The name and address are usually obtained from the customer details.
- Enter the receipt reference number and the date of the receipt, by clicking on the calendar icon.
- Select the cash account into which the cash receipt has to be entered. Selecting the ‘Apply to revenue’ tab helps the receipt to be automatically updated in revenues. If the customer has not paid the entire outstanding amount, Sage 50 applies the receipt to the ‘Apply to invoices’ tab.
- Enter the receipt description and select the relevant ‘General ledger’ (GL) account that needs to be credited.
- Enter the amount in the ‘Amount’ column. Sage 50 calculates the total amount and displays it at the top of the ‘Apply to revenues’ tab.
- Once the receipt has been created, click ‘Save’ and post the transaction to the correct account.
Tip: The deposit ticket ID is referenced from the default one generated in the practice set. To avoid this, delete the ID from the practice set and leave it blank.
FACT
The financial accounting period ends on the accounting reference date (ARD). Companies are allowed to file their accounts up to nine months from the ARD if they are a private company.
Source: gov.uk
7.5 How to Create Bank Deposits
Businesses usually prefer to create bank deposits over the course of a week or a few days.
The bank deposits are collected in a batch, over a week or a few days, and are then deposited in the bank. Creating a bank deposit does not automatically update the general ledger; however, it is necessary to update it because bank reconciliations need to be performed at regular intervals.
In order to record a bank deposit in Sage 50, users should go to the ‘Bank navigation centre’ and select the ‘Bank deposit’ icon. From the drop-down list, select the ‘New bank deposit’ option.
Alternatively, this option can also be accessed from the ‘Customer and sales’ menu, as explained in Module 8. The user can create a bank deposit every time there is a sale.
To create a bank deposit:
- Select the correct account ID for the cash deposit, in case the business uses more than one cash account.
- The ‘Select for cash’ window will display all the cash receipts that have been received, as well as recorded, but have not yet been deposited in the bank.
- Select the date of the bank deposit on the ‘Calendar’ icon.
- In the ‘Deposit ticket ID’ field, enter the bank deposit reference number. Sage 50 will provide a default reference ID the first time. The user can either use this or change it. The same ID is used to complete the bank reconciliation statement.
- In the deposit column, tick the box for each bank deposit that is being created. This will show the deposits that need to be deposited in the bank.
- The ‘Totals’ column calculates the totals for each type of cash deposit. Click ‘Save’.
7.6 Bank Reconciliation
Bank reconciliation is the process by which a company can tally its own records, including general ledger, balance sheet, etc. with the bank’s records. It may be that the balance on the company records is different to the bank records.
For example, the company may have received or issued cheques a few days before bank reconciliation, and these may not yet have been cleared.
Inconsistencies between the company’s records and the bank records could be due to one or more of the following causes:
- Bank charges levied over a period of time;
- Cheques that have been deposited but not yet cleared;
- Any monies collected by the bank, according to standing order instructions from the company;
- Interest credited or debited to the company account;
- Clerical errors;
- Direct payments into the company bank account;
- Cheques that have been dishonoured.
It is also likely that the bank may have deducted service charges or loan repayments that are not as yet reflected in the company records.
The bank reconciliation process is associated with:
- Internal control of cash flow and ensuring accuracy in accounting records. This further ensures accuracy in financial statements;
- Improved security because you can spot inaccuracies and inconsistencies; for example, you may spot a transaction that was not authorised but that has been processed through the bank;
- Improved control over cash flows and enhanced knowledge of the current financial position of the company.
The bank reconciliation process is usually performed once a month, but there are no hard and fast rules regarding the reconciliation period. Small businesses may decide to reconcile the accounts once every two months or once every quarter. For users of Sage 50, bank reconciliation involves matching records in Sage to the company bank records. The process is far simpler today because bank account information is also accessible online.
For Sage 50 beginners, bank reconciliation may initially appear to be a daunting process so it is a good idea to familiarise yourself with the process. The bank reconciliation process in Sage 50 involves flagging entries that have been reconciled. Sage 50 automatically records the date on which each record was checked.
The Different Sections Pertaining to Bank Records – 1m 14s
7.7 How to Prepare for Bank Reconciliation
If the user is already using the bank account and the records have already been reconciled, there is no need for preparation.
If you have a bank statement for previous transactions, you are ready to begin the reconciliation process.
The time required for the reconciliation process depends on the number of transactions that need to be reconciled. Sage 50 can save the transactions that have been reconciled and thus you can simply continue the reconciliation process during the next session.
If you are performing reconciliation for the first time, you need to check the following important requirements:
- There may be older transactions that have not yet been reconciled. Start reconciling transactions from day one or the first day on which the account was opened, assuming that was not too long ago.
- The user should consider clearing all the transactions before the date of subsequent reconciliation. If there are any differences between the company records and the bank records, you need to make an accurate adjustment.
In Sage 50, users can run a bank reconciliation procedure, in order to compare the bank statement with the transactions in the account. When the user commences a bank reconciliation process, the ‘O/B’ (Opening balance) must match the last reconciled balance in the window. If the two amounts do not match, the reconciliation will not be balanced.
Step-by-Step Reconciliation Process
Before the user starts the reconciliation process, they must make a note of the opening balance, which is the starting point of the reconciliation. Follow the steps below:
- Select ‘File’, then ‘Backup’, to make a backup of the data for future use.
- Select ‘Bank’ then ‘Reconciliation’.
- For the ending balance, enter the opening balance from the bank statement, enter the statement date (the date before the current bank statement) then click ‘OK’.
- Click on ‘Swap’ then ‘Match’ then ‘Check difference’.
For any differences that arise, make an adjustment in the following manner:
Tip: The T9 tax code is used in the British accounting system. It is a default non-VAT tax code. Transactions with a T9 tax code will not be eligible for VAT returns.
- If the difference is a positive value, click on ‘Adjust’, ‘Bank payment’, click on ‘OK’, post a bank payment for the difference, enter the date before the bank statement, enter ‘T9 tax code’, ‘Suspense nominal code’ (which is 9998 by default), ‘Save’ then ‘Close’.
- If the difference is a negative value, click on ‘Adjust’, ‘Bank receipt’, ‘OK’, post a bank receipt for the difference, enter ‘T9 tax code’, ‘Suspense nominal code’, ‘Save’ then ‘Close’.
- If the difference is zero, this means that the company records and the bank statement are completely reconciled, and there is no need to post an adjustment. In this case, select ‘Reconcile’.
At this stage, the total reconciled amount should match the opening balance on the bank statement. The next reconciliation process will begin from the current bank statement.
Module Summary
Every account contains transactions, and these transactions can be viewed in the order in which they were posted by Sage 50 by selecting the ‘Nominal record activity’ tab. Similarly, users can add additional information to each account by selecting the ‘Nominal record memo’ tab.
Users can also view nominal records, by applying filter criteria, such as date range and transaction type. The user also has the option to switch between records in multiple accounts, by selecting the ‘Previous’ and ‘Next’ keys.
Bank records are crucial, to avoid inaccuracies in financial reports and the resulting likelihood of litigation. Updated bank records also help improve decision making and provide a better understanding of the financial health of the company. Bank records can be entered as a blank field or by duplicating records, if you wish to copy existing bank details.
Sage 50 provides three default bank accounts: cheque account, cash account and credit card account. Bank records can be edited or deleted, provided that they are neither control accounts nor have a balance of anything except zero.
Bank reconciliation refers to the process of matching the company’s records to the bank records. The frequency of reconciliation will depend on the size and nature of the business. The starting amount for the reconciliation should match the opening balance of the bank statement.
Accurate and complete reconciliation helps maintain accuracy in financial statements and enhances security as inconsistent transactions come to light. Sage 50 provides a simple, user-friendly and convenient bank reconciliation tool.
Module 8
Nominal Ledger, Managing Petty Cash, Customer & Supplier Records
Objectives
- What is a nominal ledger and how to use it;
- How to plan customer and supplier codes;
- How to create and enter details for customers and suppliers;
- How to delete customer and supplier records;
- How to record petty cash;
- How to record bank transfers.
8.1 Introduction
All transactions stored in the form of records are collectively known as the ‘nominal ledger’.
The nominal ledger contains all the details of various transactions. The records can be compared to the process of maintaining index cards in a manual filing system.
It is very important for businesses to plan their customer and supplier codes so that they are meaningful and informative. At a glance, the user must be able to tell if the records belong to a customer or a supplier. This module will explain how to assign unique codes, so that there is no confusion between customers or suppliers with identical names.
In addition to account names and contact details, Sage 50 allows users to enter memos and communication details for each customer or supplier. Memo files are stored as text files with .PLM extensions for suppliers or .SLM extensions for customers. Users can also store all communications, including emails, details of telephone calls and faxes in the communications field.
Customer and supplier records can be deleted under certain conditions. These steps are explained in detail in this module.
Every business uses petty cash accounts for day-to-day expenses for small amounts. Sage 50 allows users to record and track petty cash expenses quickly and easily. Similarly, bank transfers can be recorded and this includes bank transfers involving non-base currencies (for users of Sage 50 Accounts Professional).
8.2 What is the Nominal Ledger Account and How is it Used?
The underlying purpose of creating and maintaining a nominal ledger is to be able to understand the areas of income and expenditure.
All the transactions entered by the user are divided into various categories called ‘accounts’. Each category type is defined by a nominal code. The individual accounts are further classified into ranges.
For example, Sage 50 comes with a default Chart of Accounts, as explained in Module 6, that contains a ‘Rent account’ with a nominal code of The rent account is categorised in the Overheads accounts’ with a pre-defined range of 7000- This automatically indicates that rent is classified as an overhead.
Sage 50 provides nine nominal account ranges which are outlined below:
- Fixed assets (range 0001 – 0999)
- Current assets (range 1000 – 1999)
- Current liabilities (range 2000-2299)
- Long-term liabilities (range 2300-2999)
- Capital and reserves (range 3000-3999)
- Sales (range 4000 – 4999)
- Purchases (range 5000 – 5999)
- Direct expenses (range 6000 – 6999)
- Overheads (range 7000-7999)
For example, the business sells organic plant saplings. The sales could be recorded as oregano saplings: 4100, thyme saplings: 4110, rosemary saplings: 4120, parsley saplings: 4130 and so on.
Users can define nominal codes in a manner that is suitable to the company requirements. If you use the Active Setup Wizard, Sage 50 will allocate default nominal codes.
Tip 1: Remember to leave gaps in every record range (although record numbers will run sequentially) so that new records can be added at a later date.
Tip 2: Records must be numbered accurately, in order to reduce the likelihood of mistakes in the preparation of management reports.
The above ranges are further classified into four different types.
These include:
- Asset Accounts: The Asset accounts comprise all the fixed and current assets. Sage 50 uses the asset accounts to store details regarding the money that the business owns. The money owned by the business or company may be in the form of property or vehicles, known as fixed assets, or money in the bank, known as current assets.
In short, the asset accounts summarise all the money owned by the business, regardless of the form in which it exists. For example, Sage 50 would automatically create an asset account for office equipment because this can be liquidated into cash.
- Liability Accounts: The liability accounts comprise current and long-term liabilities. Sage 50 helps business users track the money that the company owes through the liability accounts. For example, VAT payments, taxes, etc. would be classified as current liabilities, and associated details would be stored in the liability accounts.
Similarly, an outstanding amount owed through mortgage payments would be stored in the liabilities accounts as a long-term liability.Additional examples of liability accounts include hire purchase and bank loans.
- Income Accounts: These comprise all the sales accounts. The income accounts keep track of the amount, date and source of revenues. Please bear in mind that no money is actually held in any of these nominal accounts – they are only used to record transactions; they only contain details.
- Expenditure Accounts: These comprise all expenses, including overheads, direct expenses and purchases. As with income accounts, expenditure accounts help keep track of the date, amount and reason for expenses. The money that is spent on purchases or rent, etc. is recorded in expenditure accounts.
The financial reports prepared by Sage 50, including Profit and Loss report and Balance sheets, are based on these four categories. Asset and liability accounts together provide complete information regarding how much the company owes and is owed. The difference between what the company is owed and owes is called the net worth of the company.
Printing records
When the user prints out each record stored in the asset and liability account, this gives a clear indication of the overall financial status of the company. Whenever the user records any transactions in Sage 50, the transactions are automatically posted to specific nominal accounts based on pre-defined nominal codes.
Example 1
Your company/business receives £1, This money is recorded as a deposit into a nominal account, perhaps called the Current bank account.
Hence this transaction would be added to the assets.
However, at the same time, it is a good idea to keep track of the source from which the money came, for future use and for the preparation of financial statements. Hence, the same transaction is also posted to the income account.
This traditional form of posting a transaction twice for improved tracking of money is called ‘double-entry bookkeeping’. Sage 50 allows users to use the double-entry bookkeeping method for transactions.
Example 2
You have spent £50 on petrol and £120 on car repairs. This transaction would be posted to a nominal account, perhaps called Bank payments.
The money for the repairs and petrol would be withdrawn from this account. The same transaction would also be posted to the Expenses account.
According to the company’s Chart of Accounts structure, the expense may be allocated to the Petrol account and the Car repair account as two separate posts. Even though this transaction involves 3 entries, it is still known as double-entry bookkeeping.
Double-entry bookkeeping can involve multiple entries for any transaction, as long as debit and credit payments are equal.
At the end of the month, quarter or year, the user is able to view all transactions in detail. Each transaction would contain the amount, date and purpose of every expense incurred.
8.3 How to Plan Customer and Supplier Codes
All customer and supplier records used in Sage 50 need a code.
It is advisable to plan customer and supplier codes that you plan to use for creating records. Reference codes play an important part in creating records. This is because, once the user has started entering records, they cannot change the reference code.
It is a good idea to use codes that will be meaningful to you. For example, you can consider using both letters and numbers to create the customer and supplier codes. This will prevent a customer and supplier with the same name from having the same reference code.
For example, Smith is a common name so Smith01 can refer to Mrs Smith, the customer, whilst Smith02 can refer to Mr Smith, the supplier. Careful planning of meaningful customer and supplier reference codes can facilitate the easy and quick retrieval of customer and supplier records.
Tip: Using leading zeroes will help to sort the codes in order.
Entering Customer and Supplier Records
Each customer or supplier record can be compared to a manual index card. Each record will contain details regarding customer/supplier name, address, contact number, email address, credit limit, etc.
As you add records, they appear in the Customer and supplier window. You are able to instantly view the list of suppliers and customers, as well as the amount that they owe.
In addition, customers that have exceeded their credit limits are highlighted in red, thus allowing users to spot them at a glance. Sage 50 makes it easier for users to study accounts that need attention. Customer and supplier lists help users keep track of sales activity, as well as manage their contacts.
8.4 How to Enter a Supplier or Customer Record
You can enter customer and supplier details directly into a blank record: click on ‘Customers’ then ‘New customer or supplier’ from the drop-down list. Enter the details of each customer as follows:
Details:
The details tab can be used to enter new details regarding suppliers and customers. If you are using Sage 50 Accounts Plus or Accounts Professional, you can enter multiple delivery addresses or contact offices for each customer or supplier.
In order to enter multiple addresses, click on ‘Other addresses’, ‘New’ then enter the details.
Contact details will include the following information/fields that you need to fill in:
- Telephone number
- Fax number
- Email address
- Website address
- Contact name
- Trade contact
- VAT number
- Account status
Defaults:
The user can use the ‘Default’ tabs for customers and suppliers, to amend any default codes that have been previously set up. The default will only affect the customer or supplier record that is currently selected.
Customer records:
The default nominal codes for customers can be found in the ‘Miscellaneous defaults’ section of the details tab. If you wish the default nominal code to automatically appear on credit notes, invoices and sales orders, tick the ‘Default nominal code’ box.
Supplier records:
As for customers, the default nominal codes for suppliers can be found in the ‘Miscellaneous defaults’ section. This is the nominal code that will automatically appear on each item line, for all purchase orders raised for the supplier.
Credit control:
Users can click on the ‘Credit control’ tab, to enter details for customers and suppliers. In order to learn more about the credit control feature, refer to the PDF ‘Help’ menu.
Under credit control, you may wish to enter information in the following fields:
Credit limit: You can set credit limits for each customer.
Settlement due days: If the company offers early settlement discounts to customers, you can enter the days on which the discount is applicable.
Payment due: In this box, you can enter the number of days after which an invoice is considered overdue.
The different options available for ‘Payment due’ include:
- ‘Days after invoice date’ (see tip explained below);
- ‘Days after first day of the following month’;
- Days before last day of the following month;
- Day of the month;
- Days one month after invoice date.
Tip: If the user sets this field to ‘Days after invoice date’, Sage 50 calculates 30 days as the payment due date. Hence, after 30 days, an invoice is considered as overdue (in the default setting).
Terms: The trading terms can be described using up to a maximum of thirty characters. The trading terms can also be printed on invoices, etc.
Terms agreed: If the company has agreed to specific terms with the customer, you may wish to tick this box.
A/C Opened: This is the date on which you started trading with the customer.
Next credit review: You can enter the date of the next credit review in this box.
Overall, Sage 50 users to access customer information in a centralised manner.
How to Enter a Supplier or Customer Record – 2m 39s
8.5 How to Manage Petty Cash using Sage 50
Most businesses require cash for daily use and everyday purposes.
Petty cash is required for small expenses, such as a trip or buying drinking water for the office. A mismanaged petty cash system can lead to stress. For any business that handles petty cash, i.e., most businesses, there needs to be systems and improved security, in order to ensure accountability.
The main points of concern associated with petty cash include the following:
- The expenses that can be claimed as petty cash, for example, staff travel and refreshments;
- Expenses that are not covered by petty cash, for example, loans;
- The employees entitled to petty cash;
- The person authorised to pay petty cash;
- The person authorised to enter and maintain petty cash records,
- The maximum amount that can be claimed as petty cash (above this amount, all payments will be paid by cheque).
Setting up and maintaining a petty cash account in Sage 50 is easy and convenient. There is a default petty cash account in the bank accounts list. The person authorised to manage petty cash withdraws petty cash from the current bank account. This withdrawal is recorded by selecting ‘Bank’ then ‘Record transfer’.
If you need to make a regular withdrawal, for example, every week, this can be performed as a recurring bank transaction.
FACT
Private businesses and companies in the UK must maintain accounting records for a period of 6 years.
Source: gov.uk
8.6 How to Record Expenses
Employees may wish to record their business expenses when they are travelling.
This makes it easier for the company to settle the expenses. This process can be performed by posting each expense to the appropriate nominal code recorded in the Chart of Accounts.
For example, travelling expenses may be posted to nominal account code 7400 and eating expenses may be posted to nominal account code 7406, also known as the subsistence account). Please note that these are default nominal codes provided by Sage Users can amend these codes, to create their own codes.
How to Record a Money Transfer
Companies often use more than one bank account for day-to-day transactions. Users of Sage 50 can record bank transfers, either by making journal entries or by selecting ‘Bank’ then the ‘Record transfer’ option. For example, users can record money transfers that they have made to top up the petty cash account.
Users of Sage 50 Accounts Professional can also record transfers between non-base currency accounts. Non-base currency accounts refers to trading accounts that involve foreign currency. In order to take advantage of this feature, the ‘Foreign trader’ box has to be ticked when the company is created.
When the user records transfers made with non-base currency accounts, Sage 50 calculates the exchange rate of the transfer, based on the values in the currency table. For beginners, there is a wizard that helps users execute this transaction. In order to access the wizard, open the ‘Bank’ module and click on ‘Records transfer’. In the drop-down list, select the ‘Wizard’ option.
To record a bank transfer:
- Account from: This is the bank account name and number from which the money is to be transferred. The ‘Record transfer’ window will display a drop-down list of bank accounts.
- Reference: The user must enter a reference number, so that the transfer can be recorded in the audit trail for the transaction. For example, you may wish to enter the cheque number.
- Date: Sage 50 automatically uses the current date, but this date can be amended, if required.
- Description: The user may enter a description of up to sixty characters. A meaningful description helps to reference the transaction.
- Payment value: This box is the amount that you wish to transfer.
- Foreign exchange rate: Users of Sage 50 Professional can enter the foreign exchange rate in this box, if they have activated the ‘Foreign Trader’ wizard.
To complete recording the transfer, click on ‘Save’.
A Note on Recording Bank Transfers involving Foreign Currency Accounts: Users of Sage 50 Professional have the option of recording bank transfers in different currencies other than the base (trading) currency. Users cannot only record bank transfers between a base and a non-base account, they can also record transfers between two non-base accounts.
How to Record a Money Transfer – 1m 19s
Sales tab:
This is relevant to customer records but not supplier records. The sales tab reflects the total of all the credit notes and invoices sent to a customer over a month. By showing the user the sums of money received from customers, the sales tab is indicative of customer trends during the month. For example, you may notice that the maximum sales orders from the customer appear to peak during the first week of the month.
Purchases tab:
The purchases tab is relevant to supplier records but not customer records. It stores information regarding credit notes and invoices sent to the user by the suppliers. The user is able to view the money owed by them to suppliers, as well as the sums already paid.
Orders (available on Sage 50 Accounts Professional only):
The orders tab can be used to view all previous sales orders placed by a specific customer or placed with specific suppliers. If you double-click any of the orders, you can view the details of the sales or purchase record.
Users can also create new sales orders, invoices or purchase orders, by accessing ‘Orders’ and clicking ‘New’. For purchase orders, the user can also duplicate an order, by clicking on it and selecting ‘Duplicate’.
Projects tab (available for users of Sage 50 Accounts Plus and Professional):
The projects tab provides details of previous projects completed with a specific customer. In addition, the user can create a new project record for the customer, by clicking on the ‘New project’ button.
Graphs:
For customers, as well as suppliers, the graphs tab shows the invoices, credit notes, etc. in graph format.
Activity tab:
This is relevant to customer records and supplier records. The ‘Activity’ tab shows all the receipts, payments, credit notes and cash discounts made by specific suppliers or customers. It also shows the overall turnover, monies paid or received and balances during a month period.
Each individual line in the Activity tab consists of a single transaction, including invoices, credit notes or cash discounts. In addition, each line comprises individual items that can be viewed by clicking the ‘+’ symbol, located on the left-hand side of the line. This will display all the items listed under that transaction.
If one or more items have been paid, you can click on the ‘+’ again, to view the payment details. You can also access aged balances of each customer or supplier.
For further information on viewing aged balances, you may wish to refer to the ‘Credit control’ Help menu.
Bank:
If the company uses the BACS (Bankers’ Automated Clearing Services) system of payment, in order to pay directly to the supplier’s account, you can use the bank tab to enter the details of the supplier’s bank account.
Communication:
The communication field can be used for both customers and suppliers. The user can enter details of all communications, including emails, faxes and telephone calls, in the communication tab. This field can include details of sent and received communications.
Memo:
You can store additional information in customer and supplier records, in the form of electronic attachments and filing system references.
For example, you may wish to enter reminders regarding communicating information to customers about new products or requesting special rates from suppliers.
Each memo that you create is stored as a separate text file with a .SLM extension for customers and .PLM extension for suppliers. All these text files are stored in a sub-directory called ‘Memo’. These files are named after the customer’s or supplier’s name. For example, JonesSLM would refer to a memo file related to a customer account called Jones.
Similarly, ACMEPLM would indicate a memo file associated with a supplier called Acme.
After entering all the above details, click ‘Save’.
8.7 How to Delete Customer Records
Please bear in mind that customer records can only be deleted if there are no transactions or if the balance is zero.
If you try to delete a record that does not meet these requirements, a warning message appears on the screen. The message explains that the record in question cannot be deleted.
If there are no transactions and the balance is zero, proceed as follows:
- Open the ‘Customer ‘module and click on the ‘View selector’, in order to view the customer list.
- Select the customer that you wish to delete.
- Click ‘Delete’. When the confirmation box appears, select ‘Yes’.
8.8 How to Delete a Supplier Record
The process of deleting a supplier record is similar to deleting a customer’s record.
You can only delete a supplier record if there is a balance of zero and there are no transactions. If you attempt to delete a supplier record that does not meet these requirements, a warning message will appear on the screen.
If the record meets the requirements, proceed as follows:
- Open the ‘Supplier’ module and click on the ‘View selector’.
- Select the supplier that you wish to delete.
- Click ‘Delete’. When the confirmation box appears on the screen, click ‘Yes’.
Tip: Users can use the Wizard option, to create new customer records and enter details. In order to access the Customer Wizard, open the Customer module and select ‘Wizard’ from the new/edit drop-down list.
Module Summary
All transactions are stored in the nominal ledger, by allocating nominal codes to each transaction. The different categories of transactions are broadly divided into four categories: asset accounts, liability accounts, income accounts and expenditure accounts.
The records contained in the asset and liability accounts provide a clear picture of the company’s overall financial status, and users are able to calculate the net worth of the company.
Sage 50 allows the user to create records for each customer and supplier. These records can be created by entering details, such as name, address and contact. The process of assigning unique codes to each customer and supplier helps distinguish between companies/individuals with identical names.
The communication tab helps store details regarding all communications, including emails, faxes and details of telephone calls. Additional information, such as reminders, can be stored in memo files for customers and suppliers.
Petty cash transactions involve the settlement of small expenses by paying cash. An efficient accounting system helps track petty cash and improves security. Users can use the default petty cash account available in the Sage 50 Bank account list. In Sage 50 Accounts Professional, bank transfers between base and non-base currency accounts can also be recorded easily and conveniently.
Module 9
How to Perform Recurring Transactions How to Create Product and Stock Records
Objectives
- How to create recurring transaction entries;
- Bank/cash/credit card payments, receipts, transfers;
- How to process recurring transaction entries;
- How to create products and view sales activity;
- How to record stock issues and returns.
9.1 Introduction
Recurring transactions include payments, receipts and transfers of regular sums every day, week, month or quarter.
They also include direct debits and standing orders. These recurring entries can be created, processed and stored in Sage
Cash/bank/credit card payments and receipts refer to regular amounts that are received from customers or paid to suppliers, etc. They also include transfers of regular amounts between bank accounts. This module explains the different types of recurring transaction entries.
Additional recurring entries include journal credit and debit transactions, as well as customer and supplier payments on account. The user will need to enter the correct net amount, depending upon the VAT scheme adhered to by the company.
To create a recurring entry, the user must enter all the required details, such as transaction type, start date, finish date, transaction amount and transaction text. This module 9 will explain how the user should complete the details and enter information in the fields, in order to create a recurring transaction.
The user can create, amend and delete product records using Sage Sage 50 also offers an efficient system with which to manage inventory. You can also calculate totals, display the figures in graph format and compare budget values to actual values.
9.2 How to Create and Process Recurring Transactions
You will often need to make regular payments in the form of direct debits and standing orders.
Users can record recurring transactions in Sage 50 and these transactions are known as ‘recurring entries’.
A Detailed Explanation of Recurring Entries
Sage 50 allows users to record recurring entries over different periods of time. These include daily, weekly, monthly and quarterly recurring entries. Users can create recurring entries for customers, as well as suppliers. For example, a customer may be paying the company in instalments, and the company could be paying a supplier in instalments.
Similarly, if there are bills that you pay on a regular basis, these can be recorded as recurring entries against the nominal accounts. Users also have the option of creating recurring transactions for regular transfers between business bank accounts.
Recurring transactions are listed in the ‘Recurring transactions’ window, and from this location, the user can add, edit or delete entries.
Different Types of Recurring Entries
Cash/bank/credit card payment: This type of recurring entry indicates regular payments from the bank accounts.
Cash/bank/credit card receipt: This type of recurring entry indicates the receipt of funds into the bank account, petty cash or credit card.
Cash/bank/credit card transfer: This section helps users record recurring bank transfers between accounts.
In order to record this type of entry, select ‘Bank’ then ‘New recurring transaction’. When you select this option, you can see the ‘Add/edit’ recurring transaction window on the screen.
In the boxes provided, enter the required details as follows:
Transaction type: From the drop-down list, select the transaction type that you wish to record. There are three transaction types available in this option:
- Cash/bank/credit card payment
- Cash/bank/credit card receipt
- Cash/bank/credit card transfer
Bank A/C: If this is a bank recurring transaction involving a receipt or a payment, enter the nominal code of the bank account into which the entry is to be posted. If the recurring transaction involves a bank transfer, enter the nominal code of the bank from which the money is being transferred.
Nominal code: If you are recording a recurring transaction involving a bank receipt or payment, this field requires the nominal code of the bank account to which the transaction should be posted. If it is a bank transfer, enter the nominal code of the bank account to which you wish the recurring transfer to be posted.
Transaction reference: You should enter a transaction reference in this field.
Transaction text: You can enter some transaction text that describes the recurring transaction. This text will be visible on the audit trail related to the transaction.
Department: If you wish to record the department to which the transaction is assigned, enter the department number in this box.
Every: This box refers to the frequency of the recurring entry, for example, ten days, five weeks, two months.
Total required postings: This refers to the number of postings that you wish to record for a specific recurring transaction. For example, the company may be paying a loan over twelve months. In this case, the finish date will automatically be updated to twelve months.
Note: The entry in the ‘Total required postings’ box cannot be a number that is less than the postings that have already been recorded for the transaction. If the user enters a lower number by mistake, a warning message will appear on the screen.
Start date: This is the date on which the user starts recording the recurring entry. Sage 50 uses the programme date as a default. However, this can be changed by the user.
Finish date: This box receives a value automatically, if the user has entered a number in the ‘Total required postings’ box. For other recurring payments, such as rent, there may not be any finish date, as the payments or receipts may simply continue into the future. In this case, no date is entered in this box. A value will only be entered for the transaction, if the user suspends posting or deletes the recurring entry.
Last posted: This is the last date on which the user has posted the recurring entry, and this field cannot be changed by the user. The ‘Last posted’ date will remain empty until the user has processed and saved the last recurring entry.
Suspend posting: The user can suspend the posting of a recurring entry, for example, in the event of a dispute.
Net amount: The user should enter the net amount of the transaction in this box. This should be the same amount every week/month, etc. If the recurring entry value varies, this box will be set to zero.
Tax code: This box is for the relevant tax code for the transaction.
VAT: This field automatically displays the VAT component of the recurring transaction.
Click ‘OK’ to save the details of the recurring transaction.
Customer payment on account: Users can record the receipt of monies from the customer to the company account.
Supplier payment on account: This option is used to record regular payments to suppliers from company accounts.
The details required in order to process and save recurring entries for ‘Customer payment on account’ and ‘Supplier payment on account’ are the same as for Cash/bank/credit card payments/receipts/transfers as above. The only additional information is the customer or supplier account code against which you wish to post the recurring entry.
The other important difference involves the ‘Net amount’ box. If you are using the standard VAT scheme, you should enter the gross amount of the transaction here. If you are using the VAT cash scheme, enter the net amount of the recurring transaction.
There will be no tax code for the standard VAT scheme, but you must enter the appropriate tax code, in the case of the VAT cash scheme.
Sage 50 will prompt you to amend ‘Customer payment on account’ and ‘Supplier payment on account’ details so that they include VAT information.
Journal credit/journal debit: This option allows the recording of recurring transfers between nominal accounts. The process of creating recurring entries for journal credit and debit is exactly the same as the above steps.
9.3 How to Process Recurring Entries
If there are any outstanding recurring entries, Sage 50 displays a message every time it is opened.
If you wish to complete posting the transactions, click ‘Yes’; if you wish to continue with other tasks on Sage 50, click ‘No.’
Tip: Users can turn off this reminder, by clicking the ‘No recurring entries’ box located in ‘Company preferences’.
Steps to Process Recurring Entries
- Select ‘Bank>’ then ‘New recurring transactions’.
- Select ‘Process recurring entries’ and the corresponding window appears on the screen. If there are recurring entries that are past their respective finish dates, Sage 50 displays a warning message and informs the user that these recurring entries will not be included in the list.
- The ‘Show due entries up to’ box shows the programme date by default, but this can be changed by the user.
- The user should post the entries, if there are no changes to be incorporated. Please note that you cannot post a recurring entry that contains a zero value. Sage 50 will display a warning message if there any recurring entries that contain a zero value. In this case, the user should either amend the value or suspend posting the entry for the current period.
If the user wishes to post a recurring entry that falls outside the current year, Sage 50 will display a message. The user will be prompted and asked if they wish to continue.
Product and Inventory Records
Every time the user creates a new product record, all the details, such as the nominal code, description, department, tax and VAT have to be entered. If the company products have similar details, for example, table mats which have the same details but different colours, the user can set default values that automatically appear whilst creating the records. This helps to save time.
Users of Sage 50 Accounts Plus and Professional also have the option of setting default descriptions for the discount tabs, in order to make them more meaningful. For example, discount descriptions could be called ‘10%’, ‘20%’ or ‘Wholesale discounts’.
How to enter Discount Tab Names
- Click on ‘Products’ then ‘Product defaults’.
- Select the ‘Descriptions’ tab, and enter the names that you want for each discount. If you choose to change the discount names, the changed discount name will appear in the following tabs:
- New customer record WizardCustomer Record Defaults tab/Additional discount list
- Product record discount tab
- Sales order processing
- Global changes
How to Set Up a Product List
Every product record that you create makes up the product list. The product codes should be as descriptive and meaningful as possible, as this will help you locate products more easily. Identifying and locating products easily will help save time whilst viewing data and preparing reports.
For example, a business selling cloth could consider a product code such as:
Cott-Bl
Silk-Re
Polyester-Gry
The product codes help identify the material and colour at a glance.
How to Create a Product Record
Product records hold important information, such as the nominal code, description, quantity and price. If company products contain similar descriptions, this can be entered in the default tab and will then automatically appear in the product record.
How to Enter a Product Record in Sage 50
- The user can enter the details directly into a blank product record.
- The user can use the Wizard to enter information into a product record.
- The user may wish to copy details from an existing record – this can be done using the ‘Duplicate’ feature.
Steps to Enter Product Details:
- Select ‘Products’ then ‘New product’. A ‘Product details’ window will appear on the screen. This must be filled in as follows:
- If the user does not enter nominal codes for the product, Sage 50 will assign default nominal codes. Please bear in mind that HMRC only accepts eight-digit product codes. Users should ensure that all information is correct, including weight units, e.g., kg, lbs, etc.
- Product records also offer a memo option, which can be used to attach electronic documents and filing system references.
- If a product is made up of additional products from the stocks, the user should also enter a BOM or Bill of Materials. A Bill of Materials is a list of all the products or parts of a product that comprise the final product assembly.
9.4 How to View Information regarding Product Sales
Users can view transactions for each product in the ‘Activity’ tab. The ‘Activity’ tab displays product information, including goods in, goods out, stock transfers, current quantities and stocks allocated.
There are two additional options available for users of Sage 50 Accounts Plus and Accounts Professional:
- The ‘Sales’ tab indicates the quantity sold and total sales value for each product on a monthly basis. In addition, the Sales tab also indicates the last date on which an invoice was raised for the relevant product.
- The ‘Sales’ tab is also used to enter the sales value of each product for each month of the previous year.
For example
February 2016 February 2015
Glue gun spray £750 £645
This helps to glean comparisons between the previous year’s sales and the current sales of a product.
You can also consider entering budget values in the ‘Sales’ tab. You can enter the budget values directly into the budget table and the total in the totals box. If you enter a value in the totals box, Sage 50 divides the total by twelve. The actual figures get updated, as you start to record invoices.
Users are able to compare the budget figures with the actual figures, for the current year and the previous year. Hence, the Sales tab in Sage 50 is a useful tool that allows you to make comparisons between allocated budgets and actual figures. This in turn helps in the business decision making process.
The ‘Graph’ tab displays all the numerical data in graph format. There are five discount tables provided for each discount rate. This means that the user is able to provide their customers with five discount rate tables. The specific discounts that the user can set up are dependent on the quantities.
You can enter information regarding your website by using the ‘Web’ tab. You can also insert images of your product in the GIF, BMP or JPEG format.
For any further assistance or information regarding the functions of the Web tab, press F
9.5 How to View Product Activity
You can view a detailed transaction history or activity for any product.
You are able to view goods in, goods out and stock transfers for every product. You are able to view current stocks, stocks on order and allocated stocks.
You can also open any associated document or invoice, if it has already been saved.
For example, if you wish to view a transaction associated with ‘Goods out’, click on the grey arrow on the ‘Ref’ column – this will show the original invoice.
You can also control the number of transactions displayed in the window, by using the selection boxes or filters.
For example, you can view transactions within a specific date range or a month. Once you set a specific set of filter criteria, the criteria will still be valid the next time you want to view transaction activity.
Selection Boxes for Filter Criteria
To display transactions for a specific month, you can select the transactions from the drop-down list in the ‘Show’ tab. In the ‘Date’ field, you can specify either a single date or a date range in which to view transaction activity.
‘Transaction type’ selects the specific transactions that meet a certain criterion. For example, by selecting ‘Adjustments’, the ‘View activity’ tab will display all the transactions for which adjustments have been made. You cannot directly change the transaction type – firstly, you will need to select ‘Custom range’, then select the transaction type from the drop-down list.
If you have selected multiple records, the ‘Previous’ and ‘Next’ buttons enable you to switch between transactions. If you wish to view the activity of another product, type the product reference into the product code box.
How to Edit a Product Record
Users can edit product records in Sage 50 quickly and easily. Product records may require amendments, in order to update the stocks with the latest information.
For example, the prices of products may be subject to change.
Tip: The only information that cannot be edited in a product record is the product code. If the user enters a new product code, the record details will clear and a new, blank product record will appear on the screen.
- Select the products and the record that you wish to edit.
- Make the required changes in the relevant boxes and click ‘Save’.
How to Delete a Product Record
Records can only be deleted if the following conditions apply:
- The product record has no outstanding transactions, including orders;
- The products are in stock and the allocated balances are zero;
- The product is not part of a Bill of Materials.
To delete a record, click on ‘Products’ ‘Record’, select the records to delete, then click ‘OK’.
FACT
Charitable companies are now subject to the same accounting laws as other companies in the UK and Scotland. Their accounting requirements are governed by charity law.
Source: gov.uk
9.6 How to Record Stocks
From the navigation tool bar, click on ‘Account postings’, then enter the details in the ‘Stock issues’ window.
These details include stock description, job title, when the user specifies a job number, cost code title, on order, allocated and free stocks.
Stock on order: This refers to stocks that have been ordered by the vendor but have not yet been shipped by the source.
Stock allocated: This refers to stocks that are currently in the inventory but are not available for use because they have already been allocated.
Inventory: This is a complete list of goods, materials or property, to support production or business activities.
Stock code: This can be entered manually, if you are aware of the code.
Date: The date is automatically displayed but can be changed by double-clicking on the calendar icon.
Job no: To access the ‘Job details’ window, enter the job number to which the stock return applies or, if you do not know the job number, use the finder button to retrieve the information. In the ‘Cost code’ box, enter the cost code, by using the finder button or, if you already know it, enter it manually.
Details: The details of the stock automatically appear in the window.
Quantity: The user can enter the stock quantity issued, or use the calculator feature, to calculate the required quantity.
Charge type: This field is usually filled in automatically.
The user can amend this value, by selecting the correct option from the drop-down list.
- Pr: This is the cost price and is taken from the product record.
- Pr: This is the sales price and is taken from the sales record.
- Rt: This is the code for the rate per item set on the cost code.
Charge rate: The charge rate is based on the charge type selected in the previous section.
Amount to bill: This amount is automatically calculated from the charge rate and quantity. The amount to bill is the amount charged to the customer for the stock used to complete his order.
How to Check Stock Levels
- Open Sage 50, and log into the company that is integrated with Sage Job Costing.
- Select the ‘Products’ module then click on the ‘Links’ pane, to retrieve the product list.
- Depending on the stock transaction preferences, the stocks will appear as goods or adjustments. When you are able to view the stocks list, please pay special attention to the following fields:
- AI: Adjustments in
- AO: Adjustments out
- GI: Goods in
- GO: Goods out
- Quantity in: This box indicates the number of stocks used in the stock return.
- Quantity out: This box indicates the number of stocks used in the stock issue.
Click on ‘Close’, to return to the product list.
How to Record Stocks – 2m 46s
Module Summary
Recurring transactions are fairly common in business management. A recurring transaction involves a regular payment, receipt or transfer of money over a regular interval. Direct debits and standing orders are also examples of recurring transactions. Sage 50 allows users to create, record and process recurring entries.
Recurring transactions can be of different types, including cash/bank/credit card payments, receipts and transfers. You can also have recurring transaction entries, such as journal credit/debit and customer/supplier on payment to account.
All recurring transactions require certain details, such as start date, transaction type, finish date, net amount and tax code. All the relevant fields need to be completed.
Users should take care to enter correct VAT information, if the recurring transaction involves receipts from customers or payments to suppliers. A standard VAT scheme does not require a tax code. Efficient stock management can help improve financial insight regarding business performance.
Module 10
How to Create, Set Up and Manage Sales Invoices
Objectives
- How to create sales invoices in Sage 50;
- The key differences between invoices, receipts and pro forma invoices.
- How to enter relevant details in the different fields, including description, quantity and price;
- How to enter order details in an invoice or credit note;
- How to duplicate credit notes and invoices;
- How to change the layout of invoices.
10.1 Introduction
Sales invoices are commercial documents that contain details regarding sales.
Invoices can be set up and recorded in Sage 50, and vendors have a choice of invoice layout designs from which to choose. This module will explain how to create and manage sales invoices using the features provided by Sage
The user can create sales invoices, by entering the different fields required to create a new invoice. Although the invoice number can be changed, a consistent number will help match sales orders with sales invoices.
The user has to enter information, such as quantity, product description and unit price. There are some fields that Sage 50 will automatically fill in whilst other information may have to be manually entered. This module will explain how to fill in information, to create an invoice.
Customers may pay up a deposit or make a partial payment towards an invoice. Alternatively, they may make overpayments or pay the full amount of the invoice. This module explains how users can post these payments using the ‘Payment on account’ or ‘Allocate to invoice’ options.
Users who wish to make duplicates of invoices and credit notes may do so, by using the ‘Duplicate’ feature provided by Sage
10.2 How to Create and Manage Sales Invoices in Sage 50
A sales invoice is a document that lists all the items bought by your customers, along with prices and the payment due date.
Invoices can be created, printed and physically sent to the customer, or they can be emailed to them.
Sage 50 provides a range of invoice layouts from which to choose. In addition, users can also create their own customised invoice layout.
Before explaining how to create and manage invoices in Sage 50, it is important to understand the difference between invoices and receipts. As a beginner, you may get confused between the two terms.
An invoice is a commercial document issued by the vendor, to request payment from a customer. A receipt is a commercial document issued by the vendor, after the customer has completed payment for the products or services. Hence, invoices are issued before payment whilst receipts are issued after payment. The purpose of an invoice is to record product details whilst the receipt is issued as evidence of payment.
Both documents are related to the sales process and record similar details, such as quantity sold, unit price and discount. Invoices record the amount due whilst receipts record the amount paid. Both documents are considered to be non-negotiable, commercial instruments that identify the buyer and seller, the amount of goods sold, the price, and so on.
Before creating an invoice, check for the following details:
- Correct customer details from customer contact records, such as address, telephone number and email address.
- If your company provides the customer with the same products and services, you can consider importing the details from the CSV file. A CSV file is a file from where the user can import customer, supplier or product records. This helps to save time.
10.3 The Process of Creating Invoices in Sage 50
The invoice window is made up of four tabs.
Details: The ‘Details’ tab is used to enter information regarding the main invoice, pro forma invoice or credit note.
This includes information regarding customer details, items and related quantities.
- To create a new product or customer invoice, select ‘Customers’ then ‘New invoice’.
- Select the type of invoice from the drop-down list.
- Fill in the different header details with the required data:
Invoice number (Inv no) or Credit note number (Crd no): Whenever the user creates a new invoice or credit number, an automated number is generated in this box. However, the automated number will not appear, if you have failed to save the invoice or credit note.
If the user wishes to edit an existing invoice or credit note, the number can be typed into the box. Similarly, if you wish to create an invoice or credit note with a specific number, you can type the number into the box.
By default, Sage 50 starts numbering invoices and credit notes at ‘1′. If the user wishes to start at a different number, this can be done by adjusting the values in the ‘Invoice and order defaults’ section.
Date: The user can enter the date of the invoice or credit note, by using the calendar function or by directly typing the date.
Order number: The user can enter a number in this box, or leave it blank. If you enter a number in this box and wish to see it reflected in the audit trail for the transaction, select ‘Customer’ then ‘Invoice or order defaults’ and select the appropriate update using the ‘Order number update’ box.
Although the order number can be changed by the user, it is advisable to retain the original number, so as to be able to match the corresponding sales orders with the invoices.
A/C: This field refers to the customer reference account number. You can access the number from the drop-down list, or manually type it in.
Item number: This is the item number selected on the invoice/credit note. If the cursor is positioned on the third line, this will show as ‘3′.
Rate (only available for users of Sage 50 Accounts Professional): This box is used to specify the foreign exchange rate, if the currency is different from the base currency.
10.4 How to Enter Product Information into the Invoice
Product information is entered as one item line per product.
Product code: The product code can be accessed from the drop-down list, or the user can type the code in manually. In addition, the user can select ‘Special product codes’ from the product list. Please refer to the note on special codes provided in Module If the user selects ‘Special product codes’, the ‘Edit item line’ window appears automatically.
A note on how to enter product line details:
This function can be used to enter additional details for product records. The user must enter product line details, by assigning nominal codes to product lines.
Please refer to Module 9 for more information regarding product records.
- Description: The item description is automatically displayed, once the user enters the product code. However, this information can be amended by the user if desired. The product description on the invoice can be edited by pressing the F3 button.
- Quantity: This field is for the quantity of products or goods to be included in the invoice or credit note. If the product is in stock, Sage 50 automatically inserts one product unit. Similarly, if the current invoice is being generated from a sales order, Sage 50 automatically inserts in the invoice the quantity from the sales order. The user can amend this quantity if required. If there are not adequate stocks to match the quantity entered, Sage 50 gives a warning message.
- Price: The price reflected in this box is the price of a single unit of the product. This information is automatically inserted from the product records (see Module 9). If you wish to use a special product code, the value that is entered in the ‘Edit item line’ appears in this field. The price can be changed by the user.
- Discount: This field displays the value by which the price has been reduced (discount amount). The user can select the item line and press the F3 key, to access ‘Edit item line’ and amend the discount amount accordingly.
- Discount%: This field gives the total discount percentage, including customer, invoice or quantity discounts.
Tip: Please note that Sage 50 will only display discounts and discount percentages if the user has amended the settings in ‘Order defaults’ accordingly.
Net: The net value of the invoice is automatically calculated by Sage 50 and cannot be edited by the user.
VAT: The VAT amount for the product appears automatically. This value can only be amended if the user has already ticked the ‘VAT amendable’ box. This box can be found in the ‘Parameter tab’ of ‘Company preferences’.
Tax breakdown list: This box breaks down the VAT into the different tax codes. If the user enters a new line in product information, Sage 50 automatically recalculates the tax breakdown. The tax breakdown list shows the following information for each line: description, rate, net and VAT.
Totals: The totals box displays the total values of the net and VAT fields.
Carriage: This box displays the net and VAT totals of the carriage costs for the products listed in the invoice or credit note. Please note that carriage information can also be entered in the footer section.
Gross: The total value of the invoice or credit note, without the deduction of taxes, appears in this box. This cannot be edited by the user.
Euro: If the user has entered currency details in the Sage 50 company settings, this box will display the Euro equivalent of the total value.
FACT
As per the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, a small business is defined as a company that has up to 50 employees.
Source: gov.uk
10.5 How to Enter Order Details on an Invoice
The ‘Order details’ function in Sage 50 can be used to enter details, such as address.
The user can access the ‘Order details’ tab from the ‘Invoice’ or ‘Credit note’ window.
The order details window will appear with most of the information already filled in from the customer record. Other information can be changed by the user. However, the changed information will only appear in that specific invoice. The corresponding sales order will not be amended. Similarly, no changes will be saved to the customer record from the ‘Order details’ tab.
Delivery address: The default delivery address is displayed from the customer records. However, this address can be changed by the user. Sage 50 will automatically assign a tax code, based on the delivery address. If there is no default delivery address, this field is left blank and can be completed by manually typing in the information.
Customer order number/telephone number: This box displays the order number and the telephone number of the customer to whom the invoice is issued.
Customer contact: This box displays the name of the person that is the customer contact. This information is taken from the customer records. If the user so wishes, they can amend the name of the customer contact for the specific invoice or credit note.
Order taken by: This box displays the name of the person who took the order at the vendor’s company. If you have restricted access rights to this function, your name (the user name) will appear in this box. This helps to reduce problems.
Notes: This box is for any additional information regarding the invoice or credit note. For example, you could consider including special delivery instructions or briefly describe the reason why the credit note is being issued.
DUNS number: DUNS stands for Data Universal Numbering System and is a 9-digit number that is used to identify a specific business or company. The objective of entering the DUNS number is to ensure compliance with the UK e-purchasing portal. According to UK law, every e-invoice and e-purchase order must contain the DUNS number, in order to pass through ‘Zanzibar’, the e-purchasing portal used in the UK.
The following options are only applicable to users of Sage 50 Accounts Professional:
Order no: If the sales invoice has been generated from a sales order, the ‘Sales order number’ will be reflected as the ‘Invoice order number’.
Date: The date on the sales order will be reflected as the date on the sales invoice.
Status: The status shows if the sales order has been dispatched.
As a vendor, if you are charging for the carriage of goods (transport), you may wish to consider entering information in the carriage details as shown below:
Net: This box displays the carriage costs, excluding the VAT value. If the user has entered a default net value in the ‘Invoice and order default’ tab, the value is automatically calculated and displayed here.
Tax code: This is the tax code that is relevant for the carriage costs.
VAT: This is the VAT amount.
Gross: This is the total value for carriage costs – this includes the net amount plus the VAT amount.
N/C: This is the nominal code and indicates the account for which the carriage costs are to be analysed. The user can choose from the nominal accounts displayed in the drop-down list.
Tip: Users who have specified a default nominal code in the ‘Invoice and order defaults’ will notice that the account code appears automatically.
Department: This is the department code to which the carriage costs are relevant. Again, the user can choose from the drop-down list or enter the nominal code manually.
Consignment: This is the consignment number of the order.
Courier: If you are using a courier service, choose the courier from the drop-down list.
The invoice or credit note is now complete and can be saved by clicking on ‘OK’. If you selected ‘Create a new invoice or credit note’, the window will now clear and is ready to receive new information.
If you selected the ‘Edit invoice’ option, the invoice details will be displayed on the screen and are ready to edit.
10.6 How to Enter Invoice Payment Details
The ‘Invoice payment’ function is used to record payment details, such as bank account.
This option does not apply to credit notes.
The user has two options from which to choose:
- The amount received from the customer can be allocated to the invoice.
- The amount received can be posted to the customer account and allocated to the invoice at a later stage.
Post as payment on account: This is the correct option if you wish to post the information to the customer’s account and allocate it to the relevant invoice later. For users who wish to choose this option, please use the ‘Customer receipts’ option, to allocate the amount.
Allocate payment to the invoice: This option allows the user to allocate the payment received to the invoice. You must click on the ‘Update’ option, to post the invoice, record the payment and deduct the amount from the invoice total.
If the amount paid by the customer is the full amount, the invoice is updated and the payment is recorded instantly. If the amount paid is in excess of the invoice amount, the surplus amount is posted as ‘Payment on account’.
If the payment received is less than the invoice amount, the invoice is recorded as ‘Partially paid’.
Payment reference: This is the payment reference number.
Bank account: The user should select the nominal code of the bank account to which the payment received should be allocated.
Payment amount: This is the amount of the invoice.
Payment already received: The user should select this option, if the customer has paid a deposit or partial payment towards the invoice. Please note that, when this option is selected, the box will display the payment received, but the transaction will not be posted.
Sage 50 Accounts Professional will automatically post the transaction using details from the sales order. For example, a client has paid a deposit against a sales order. This can be posted to ‘Payment on account’, and the user can create a second ‘Payment on account’ or ‘Allocate the amount to invoice’ for the outstanding amount.
Tip: If the vendor is following a VAT cash accounting scheme, overpayments are subject to tax liabilities. These tax liabilities will be posted as ‘Payment on account’.
In this case, Sage 50 will prompt the user to enter the tax code for the overpayment. The suggested tax code is the default one from the customer record. However, the user can enter a different tax code from the drop-down list.
There is an alternative way to enter the payment details. The user can cancel and return to the payment details window and amend the payment amount, to match the value of the sales order.
The invoice is now created and can be printed or saved.
Summary of how to Post an Invoice
- Select ‘Customers’, ‘Invoice’ then click on ‘Update’.
- Click on ‘OK’, to update the ledgers.
- The report can either be printed or saved in a txt, csv or Sage Data Report format file (.datareport).
10.7 How to Duplicate Invoices and Credit Notes
The duplicate function provided by Sage 50 helps save time, by duplicating invoices and credit notes.
Users who need to create multiple copies of the same invoices and credit notes will find the ‘Duplicate’ function useful.
Steps to duplicate an invoice:
- Select ‘Customers’ then ‘Invoice list’.
- From the ‘Invoice window’, select the invoice or credit note that you wish to duplicate and click on ‘Duplicate’.
Tip: Please note that Sage 50 makes an exact copy of the original invoice or credit note. The duplicate will not take into account any price changes, etc. that may have occurred since the document was created. If required, the user should make changes manually, by checking the price of each item.
- If the user wishes to use the ‘Auto-number’ feature, Sage 50 assigns the next number to the duplicated copy of the invoice, when you save it.
- Click on ‘Save’, if you wish to save the duplicated invoice, or ‘Discard’, if you do not wish to save the duplicate.
- Click on ‘Close’, to return to the invoice window.
How to Customise an Invoice Layout
Users have the option of customising the default invoice layout in Sage For example, you can add logos, an invoice number, in order to match the system, and invoice terms. Customising an invoice helps transform invoices into meaningful and informative documents.
10.8 Selecting the most suitable invoice layout to amend
One way is to select a default layout that is closest to the layout that you want.
You can amend the following parameters in the invoice layout:
11˝ or A4: This is the paper size that you wish to use. Custom paper size for invoices and credit notes are usually A4 size.
This can be changed in the following manner: select ‘File menu’, ‘Page setup’, ‘Size’, select the correct size then click on ‘OK’.
To select paper orientation, select ‘File menu, ‘Page setup’, ‘Orientation’, select either ‘Landscape’ or ‘Portrait’ then click on ‘OK’.
With/without discount: This option allows the user to choose whether or not they want discount values to appear on the invoice.
Euro: The invoice will indicate a Euro rate at the end.
Tax rate: This option allows the user to show the VAT rate breakdown on the invoice.
EC VAT description: If the sales item uses the EC VAT code, this will be displayed along the item line.
Sage Pay: If your company uses the Sage Pay software application, the customer can use this option to pay online.
Email: If the user wishes to send the invoice by email, it is best to use plain paper layouts.
The user should use the options above to customise the layout of the invoice. Once this is complete, the next step involves opening the customised layout in the Sage Report Designer.
How to Open the Invoice Layout in Sage Report Designer and Enter a New Name and Description
In earlier Sage versions:
- Open ‘Invoices and credits’ and select ‘Customers’, ‘Links pane’ then ‘Invoice list’.
- Select the required ‘Invoice or credit note’ then ‘Print’.
- Select the invoice layout that you have chosen to amend.
- Click on ‘Edit’, ‘Report menu’, ‘Report properties’, enter a new layout name and description then click on ‘OK’.
For later versions of Sage (version 3), go to the top of the ‘Report explorer pane’, select the current layout description, select the ‘Properties pane’, enter the name of the new layout description then click on ‘OK’.
Tip: If users wish to check their Sage version of Report explorer, they should select ‘Help’, ‘About’, ‘Application’ then ‘File version’.
10.9 Invoice Layout Structure in Sage 50
When a user edits the invoice layout in Sage 50, each page is split into multiple sections.
The data output in each section is determined by a set of filters.
Each item is located in a section and the setting on the filters determines whether or not the item will appear on the page, the data that will be displayed in it and the frequency with which it will appear on the invoice page.
Important note: Please bear in mind that, although invoice names are the same, the number of sections may vary across different versions of Sage The number of invoice page sections will vary, depending on the specific layout that you wish to edit.
Some common invoice section names include the following:
- Name/address of the customer;
- Invoice number header/footer sections;
- Item number;
- Service quantity, etc.
In order to add additional information from the company accounts data, select ‘Variable pane’, expand the table and drag and drop the required variable to the invoice page on the layout.
If the company deals in multiple currencies, you can insert the required currencies into the invoice layout: select ‘Variable pane’ then ‘Expand currency table’. Drag and drop the currency symbol into the relevant position on the invoice layout page.
Sage 50 features can be used to create pro forma invoices, as well as invoices. A pro forma invoice is similar to an official quotation and is created before the order is placed or the goods are delivered. A standard invoice is created before the actual payment is made and is considered a commercial instrument.
A pro forma invoice helps a potential customer decide if they wish to confirm an order. An invoice is created to confirm the price that the customer has to pay. Please note that pro forma invoices are not posted to accounts, but invoices are posted to accounts.
The Importance of Invoicing in the Accounting Process
Invoices provide an important form of record keeping in the accounting process. They help the vendor identify at a glance the date of sale, quantity, amount, etc.
They also serve as important documents, in the event of a dispute with a customer. In addition, invoices help in accurate tax computation. The absence of efficient and updated invoicing means that there is no evidence of a sale having taken place.
The Different Sections Pertaining to Sales Invoices – 2m 18s
Assignment
Module Summary
Invoicing forms a crucial part of the business and helps the vendor track sales and payments, as well as inventory. Accurate invoicing also helps in the process of computing taxes and reduces the likelihood of an audit.
Sage 50 can be used to create invoices and pro forma invoices that are used in a manner similar to official quotations. Whilst pro forma invoices do not get posted to actual accounts, invoices and receipts do, as they have to be accounted for.
The user has to enter all the required information, in order to create an invoice. These details include product code, description, customer details, date, unit price, quantities, tax code and VAT. For users of Sage 50 Accounts Professional, the software automatically inserts information from the sales order.
Payments received can either be posted as ‘Payment on account’ or ‘Allocate to invoice’. ‘Payment to account’ means that the amount is posted to the customer account, and the invoice is updated at a later stage.
Overpayments from the customer are subject to tax liabilities, and Sage 50 prompts the user to use the default tax code.
EXAM QUESTIONS
1. What are the key differences between bookkeeping and accounting?
You may wish to discuss how bookkeeping relates to mechanical and repetitive tasks whilst accounting involves a broader perspective. For example, bookkeeping involves
the day-to-day recording of transactions whilst accounting is related to preparing
financial statements and information for users.
2. How would you describe the processes of financial and management accounting?
Think about the processes from the point of view of the end users of the information.
Each user requires the information for different purposes.
3. Discuss the key differences between manual and computerised accounting
systems.
Manual processes are more likely to be subject to higher levels of human error, due to
duplication of tasks, illegibility of handwriting and fatigue. Computerised systems are
able to streamline processes from the original transaction data.
4. What are the key differences between Classic and Enhanced Views in Sage 50?
Classic and Enhanced Views provide the user with different options, such as icons,
modules and toolbar buttons. Discuss the differences with respect to modules, tasks
and icons
5. What information do you require before completing the Active Setup Wizard? Describe
the different pieces of information that you would need to keep to hand.
Business owners would need to consult previous accounting
records or communicate with their accountant, to obtain the relevant information which
includes VAT details, the legal company name and financial year.
6. How would you go about creating a group for reports?
You would begin by going to the Reports index for that module and selecting reports
that should be included in the group.
7. What are the different dashboard views that you can select?
The choice of dashboard view would depend on the kind of information that you wish
to view every time you open Sage 50. Some users may not wish to have a dashboard
view at all.
8. What are control accounts? Describe the different types and how they are beneficial.
Control accounts allow the user to view total balances from individual accounts easily
and conveniently
9. Describe some common errors that may creep in when you create a Chart of Accounts.
How can these errors be rectified?
The user may come across some common errors when using nominal codes. Codes
may be omitted, duplicated or overlap with each other.
10. Explain the differences between asset and liability accounts.
Every business has to track income and expenses and identify the areas from which it
is able to generate revenues. Income and expenditure transactions are stored in asset
or liability accounts.
11. The company receives £300 as payment from a customer. Into which two accounts
would Sage 50 post this transaction? What is this method of book-keeping called?
Every transaction is posted into two corresponding accounts, in order to track the
amount, date and purpose of the transactions. This makes it easier to review
information at the end of every accounting period.
12.What could it mean when a customer record is highlighted in red in the customer list?
What can you do about it?
The underlying objective of customer records is to be able to see customer details at a
glance. A record that is highlighted in red indicates that the credit limit has been
exceeded.
13. What is the difference between a recurring transaction and a one-off transaction?
Recurring transactions refer to transactions involving regular sums of money paid,
received or transferred over a specific period of time. By using the features of Sage 50,
users can save time and reduce errors, by recording and processing recurring
transaction entries.
14. What are the advantages of using the ‘Product record activity’ tab in Sage 50?
The ‘Product record activity’ tab allows the user to view all transactions for each sales
record. Other features, such as the previous year’s values and budget values make it
easier to compare the sales performance of each product.
15. A customer has paid a partial deposit for products bought from your company. How
would you create an invoice for this transaction, and how would you post the payment?
A partial payment on an invoice can be posted to ‘Payment on account’ or allocated to
an invoice. You can also alter the layout and manually incorporate changes if you wish.
Definition of Accounting and Financial Management
The timely and accurate disclosure and communication of financial information is crucial to the financial position of a business.
Two of the most crucial criteria for measuring the efficacy of an accounting system are usefulness and credibility.
Bookkeeping and accounting are often used synonymously, but there is a difference.
In the UK, there are a number of statutory bodies that have developed guidelines and standards, to ensure fairness, truth and transparency in the financial information declared by businesses.
Financial statement reporting is a crucial function of accounting systems.
A computerised accounting system is one that processes financial transactions and generates reports, in accordance with the regulations laid down by the government.
Before moving on to an introduction to Sage 50, it is important to understand the basic differences between manual and computerised accounting systems.
‘Behind every good business is a great accountant.’
Sage 50 accounts, formerly known as Sage Line 50, is a software application designed to help users manage financial accounts, nominal and sales ledgers and cash books.
Sage 50 has been thoughtfully designed to anticipate the needs of small or medium business owners and these include the management of cash flow and the creation of invoices.
Users who are familiar with Windows will find it familiar to navigate Sage 50 software.
The following step-by-step guide explains the installation of Sage 50 for a single user.
Sage 50 comes in a range of editions, to suit the individual requirements of small businesses.
Before explaining how to use Sage 50, we will recap its advantages and why businesses should consider using it.
From the desktop, click on Sage 50.
This module will explain how to enter details, in order to set up a new company or business on Sage 50.
Welcome Window
Entering Company Details
How to Select and Enter Business Type
Selection of Financial Year
How to Enter VAT Details
Selection of Currency
Activate the Programme
Setup Complete
If you already have a company and wish to enter the details into Sage 50, you can either enter the details onto an individual PC or a networked PC.
This section explains how to locate data using the search options mentioned above.
This option is applicable when the user chooses to restore data from a backup file.
New users of Sage 50 are entitled to use Sage Cover at no charge for a period of 45 days.
Shortcut keys help users access faster frequently used functions.
Sage 50 features can be accessed with the help of the keyboard and the mouse.
The ‘Find transactions’ menu can be accessed, either with the help of shortcut keys located on the left-hand side of the screen or from the ‘Edit’ menu.
Users are able to generate reports from various navigation centres of Sage 50.
Sage 50 offers user-friendly functions, such as Report designer.
This feature allows users to sort data in reports into more manageable groups.
Sage 50 is compatible with most Windows products and versions.
Dashboards are a quick and convenient way of obtaining an overview of a module at a glance.
Whenever the user selects a task or link from the Sage 50 navigation Bar or tool bar, a new window appears in the work area.
List Windows
