1.         File invoices in alphabetic order by supplier using file dividers to identify each supplier. Arrange all invoices from each supplier in date order. Alternatively, arrange invoices from all suppliers in date order and write your own reference on each invoice such as ‘SUP 1, SUP2’ etc.

2.         Post invoices on your software through the purchase batch including all information in the example below. The VAT can usually be found on the invoice. Use the expense accounts to analyse expenses by major categories. (Use your last set of accounts to guide you when selecting categories).

           

            Note on VAT

            Gross includes VAT. Net is before VAT is added on. If your business is not registered for VAT or there is no VAT due on the sale or expense, then VAT is ignored and net will be the same amount as gross.

 

 If it only states ‘inclusive of VAT’, simply take the gross amount divided by 117.5 (UK) multiplied by 100 to get the net amount. The VAT is the difference between the gross and net amounts. If you have not registered for VAT, use the gross amounts in the net columns and ignore VAT.

 

3.                  Your software will credit individual invoice totals to the suppliers’ individual creditor accounts.  Batch totals will be debited to individual expense accounts and credited to the creditors’ control account.  Some software allows the option to post individual invoices to these accounts that makes the general ledger very bulky to print and analyse, but keeps a detailed audit trail of all transactions.  Keep a printout of the posted batches to ensure that all batch totals can be traced back to a list of invoices.

 

Purchase invoices
Date	Supplier Name	Supplier  account number	Invoice number/ Own ref	Expense account number	Gross       £	VAT       £	Net expense     £

 

 

 

Spot checks

 

 

 

1. It is a good idea to add up purchase invoices manually to ensure purchases have not been under- or over stated. 
2. Ensure all like expenses are posted to the same expense account code and that two codes do not exist for the same type of expense.
3. Ensure all expense accounts are in debit and the supplier control is in credit.      

Debtors

Purchases on account

Creditors

Payments and receipts

Bank reconciliation

Depreciation

Stock held for sale and work in progress

Expenses paid in advance and in arrears

Long term loans

Trial balance

Close down

Income statement

Balance sheet

Cash Flow Statement