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Tax Amounts on Balance Sheet compared to Tax GST Reports – Cash and Accrual

Aust Tax & GST, BAS what checks, Bookkeeping, ATO

Tax Amounts on Balance Sheet compared to Tax GST Report – Cash & Accrual

  1. The end of year Balance Sheet shows different figures to the GST Accrual (& Cash) report.  Why?            
  2. We thought that the GST Liabilities section of the Balance Sheet gets automatically updated when you enter a Spend Money purchase or raise a Sales invoice.  Is this the case?
  3. Or do we have a classification issue in our MYOB account set ups that we need to fix?

The answer is – The amounts in the GST accounts should reflect the way the transactions are created, and depend on whether cash recording (cheques and deposits or cash receipt sales) or accrual recording is used (invoice sales and purchases or bills).

Cash transactions recognise revenue sales and expenses when actual CASH is received and paid, ie when paid. The GST accounts will have the exact GST amount for each transaction.

Accrual transactions recognise revenue sales and expenses when the TRANSACTION occurs, not when paid. The GST accounts will have the GST on from the invoice or purchase.

If you report tax amounts for a period, keep in mind the way transactions are entered, as the GST on sales and the GST on purchases will not be picked up if reporting on Cash basis, and are not paid in the time frame. If they were paid, they would appear in the report.

Always check on screen the GST detail reports to see what transactions are picked up for the period, and after checking, if ok, PRINT to keep a record, then print the GST/Tax summary report.

The balance of the tax accounts also changes, as we post the amount reported to the ATO to them, reducing/increasing the account to reflect what is reported and paid (or refunded). So a tax payment during the period reported also changes the Balance Sheet amount. Look through the detail of the transactions in the tax accounts, and see what has occurred.

See also Cash and Accrual – will there be Debtors (Accounts Receivable – AR) and Creditors (Accounts Payable – AP)?

And for a quick summary of the reports suggested to check and use to prepare a BAS, go to MYOB – Aust. BAS Checks Reports & Entries

Or call to ask any questions, Aust 0407 361 596

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MYOB – Quickbooks – BAS – Transactions to include at certain codes

Client emailed me after my visit setting up a motor vehicle asset:

“Just need to make sure the following is correct:

1.   When I do the GST report for the BAS it shows the full price, $23,922, for the van as the capital purchase. Is that right or should it just be the $4,000 deposit paid?

2.   It then shows this amount in the N-T Not Reportable section as a minus amount: -$23,922.

3.   The ‘total’ amount in the ‘Not Reportable’ section is showing: -$17,033.41.

Just checking as I don’t understand the minus amount in the N-T.”

MYOB Quickbooks BookkeepingAnswer:

1.   Yes the full $23,922 is reported as CAP capital purchase G11.

2.   The -$23,922 will be the other transactions in the journal we did to raise the asset and the finance in liability, I expect (N-T code is auto-added to the line when we add each line), and N-T is NOT reportable. If you click on the negative amounts in the GST Detail report, you can go to the transaction and see which line it comes from and determine whether to include or leave out. You would have to look at the GST Detail report to see what else is on the N-T part, eg. if bank charges or interest are there with N-T code, then they are usually included in the purchases.

3.   The -$17,033 looks to be the total N-T including the -$23,922, so as in 2 above, if there are bank charges and interest etc that are business expenses, then subtract the -$23,922 from the -$17,033 and add it to the purchases for the G10 amount.


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MYOB – How to enter a BAS refund from the ATO

If a Refund from your BAS has come from ATO (or is due and you want to enter it now), here are the steps:

Go to Banking Command Centre

>Receive Money

> Pay from Account (where paying from)

>ID# leave auto # >Date

>Payor ATO

>Amount Received

>Memo: ATO BAS Y10 Q2 Refund

> Acct# in lower section to allocate: GST Collected and type in the 1A NEGATIVE amount from the BAS form, next line GST Paid and type in1B as POSITIVE, then PAYG Liability (or Payroll Liability) as NEGATIVE. Use NO TAX CODES. The Total Allocated (in the lower part of the transaction) should match the Amount in the top yellow, top RHS >Record.

Click on the image below to see the detail.

ATO BAS Refund Recieve Money MYOB

ATO BAS Refund Recieve Money MYOB

(What reports should I check and use to be able to fill out my BAS? See HERE for MYOB, and HERE for Quickbooks)


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MYOB – export of information of BAS for accountant

MYOB Quickbooks Bookkeeping

Bookkeeping Help

Client emailed: Doing my first BAS with accountant on Wednesday, he wants me to put file on USB Is that through the file information and I export to USB??? I am not computer savvy And am hoping that I have entered what I had correctly….it will be D Day for me, thank You for your assistanceJ

What to do: Go to (> means click)

  • >File
  • >Back up – select “back up company file and M-Powered…” and also “Check Company File for Errors”
  • >Continue, and MYOB will do a verification, wait until it finishes, about a minute
  • In the next screen it usually goes to a Back up file, but easier to find it if you choose to save on desktop
  • Put the USB in computer, and copy the MYOB off the desktop onto the USD
  • Reject the USB and you can give it to the accountant.
  • You could possibly email it to them as it shouldn’t be too big a file at this early stage


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Cash and Accrual – will there be Debtors (Accounts Receivable – AR) and Creditors (Accounts Payable – AP)?

MYOB Quickbooks Bookkeeping

Bookkeeping Help

Cash basis accounting companies should only be recognising revenue and expenses when the cash is received and paid if their books are reporting on a cash basis. In this case, the debtors and creditors should not be on the balance sheet. If their books report on an accrual basis, which provides a more accurate picture of their financial condition, then their balance sheet will include these accounts.

Accrual basis accounting companies, recognise revenue and expenses when the transaction occurs, not when paid. Accrual accounting companies that are taxed on a cash basis, will also have this account on their balance sheet; however, an accrual to cash adjustment will be made at year end for tax reporting purposes. The balance in this account at year end will be reported as a book/tax difference on the tax return.

There are circumstances where liabilities would be on the balance sheet of a cash basis (per books) company. For example, a loan that the company took for the acquisition of fixed assets. I would ask the company’s tax agent for guidance on each individual situation though just to make sure.

If using cash accounting, the adjustment at the end of the year is to make a General Journal entry that zeros out Debtors/AR –  
Debit Sales
Credit Accounts Receivable.
If you don’t make this Journal Entry, your Sales will be overstated on your Income Statement.

The same is made for Creditors/AP –

Credit Purchases/Cost of Sales

Debit Accounts Payable


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MYOB – Aust. BAS Checks Reports Entries

(For earlier MYOB versions, the reports may be in a different order)

After all transactions are entered (all bank accounts, loans, petty cash, credit card statements, sales invoices and purchases and payments reconciled) the following is a good best-practice process to follow for preparation before the BAS form is completed:

1. Check tax codes exceptions: Reports >Index to Reports >GST/Sales >Tax Code Reports >Tax Code Exceptions (Invoice Transactions AND also do Cash Transactions) >Customise, select required date range. Check that the tax code is not required where the report lists exceptions, or if there is a different code, that it is correct for that transaction. Click on transaction to change, correct any mistakes. Print to keep a record.

2. Check transaction coding detail: Reports >Index to Reports >GST/Sales >GST Reports >GST (Detail-Cash or Accrual, as required) >Customise, select required date range. Check that the tax code is correct for the type of sale or expense (eg for no GST: FRE if sale, or purchase etc). Correct any mistakes. Print to keep a record

3. Report Summary for the BAS: Reports > Index to Reports >GST/Sales >GST Reports >GST (Summary -Cash or Accrual, as required) >Customise, select required date range. (If not sure, contact us for free assistance). Print.

4. Payroll W1 and W2 PAYG tax report– create a payroll report that shows these for the period: Reports >Index to Reports >Payroll >Employees >Activity Summary >Customise, select required date range. Print.

5. Collect all reports together, with the summary GST and Payroll at the front.

6. Complete the BAS, copy the form both sides and clip together with the reports as a record for your accountant Year end

7. Record transaction:

(a) Payment to ATO: Banking >Spend Money >Pay from Account (where paying from) >Cheque # >Date >Amount owed >Card ATO >Memo: ATO BAS Y10 Q2 > Acct# in lower section to allocate: GST Collected and type in the 1A, next line GST Paid and type in1B as NEGATIVE, then PAYG Liability (or Payroll Liability). Use NO TAX CODES. The Total Allocated below should match the Amount in the top yellow, top RHS >Record

BAS to Pay Spend Money MYOB

BAS to Pay Spend Money MYOB (click enlarge)

(b) If a Refund is due from ATO: Banking >Receive Money > Pay from Account (where paying from) >ID# leave auto # >Date >Payor ATO >Amount Received >Memo: ATO BAS Y10 Q2 Refund> Acct# in lower section to allocate: GST Collected and type in the 1A NEGATIVE, next line GST Paid and type in1B as POSITIVE, then PAYG Liability (or Payroll Liability) as NEGATIVE. Use NO TAX CODES. The Total Allocated below should match the Amount in the top yellow, top RHS >Record

BAS Refund Receive Money MYOB

BAS Refund Receive Money MYOB (click enlarge)


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Quickbooks – Aust. BAS Checks & Reports & Entries

(For earlier Quickbooks versions, the reports may be in a different order)

After all transactions are entered (all bank accounts, loans, petty cash, credit card statements, sales invoices and purchases and payments reconciled) the following is a good best-practice process to follow for preparation before the BAS form is completed:

1. Check tax codes exceptions: Reports >Tax >Tax Code Exception Report – Detail, select the dates for the period required (eg Last Quarter). You can save a copy in Memorised Transactions: Ctrl+M. Check that the tax code is not required where the report lists exceptions. Correct any mistakes. Print to keep a record.

2. Check transaction coding detail: Reports >Tax >Tax Detail, select the dates for the period required (eg Last Quarter). You can save a copy in Memorised Transactions: Ctrl+M. Check that the tax code is correct for the type of sale or expense (eg for no GST: EXP if sale, or FRE if purchase etc). Correct any mistakes. Print to keep a record

3. Report Summary for the BAS: Reports >Tax >Tax Summary, select the dates for the period required (eg Last Quarter). You can save a copy in Memorised Transactions: Ctrl+M. >Modify report >Advanced > Display Columns: Active, and Tax Basis: Net or Gross as you prefer. (If not sure, contact us for free assistance). Report should have just columns and rows that have amounts. Print.

reckon melbourne bookkeeping consulting tax summary BAS

 

4. Payroll W1 and W2 Payg tax – create a payroll report that shows these for the period

5. Collect all reports together, with the summary at the front.

6. Complete the BAS, then make a copy of the BAS form both sides and clip together with the reports as a record for your accountant Year end.