h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Hello
I've just started a new job and the software is different to what I am used to.
I am attempting to do a Profit and Loss report for January - and it is showing my Purchase Invoices as Cost of Sales - although these have not been paid.
I always thought that these figures only showed on the P&L once you paid them.
Can someopne clarify for me please?
Irene

Hello bazandfee.

I'd guess you were using "cash accounting" in your last job and in this new one, you're using "accrual accounting". Cash accounting is good for smaller businesses because, for example, they don't have to pay off their VAT liability to HM Customs until their customers pay them. When a business gets beyond a certain turnover, they have to use accrual accounting, because HM Customs insist on it. All the bookkeeping packages I've used, allow you to choose between cash and accrual accounting when you first set them up. You can normally change from cash to accrual accounting later, but I don't think many (possibly any) of them allow you to change from accrual to cash accounting.

G'day bazandfee - Welcome.

I have just left a Welcome message on your space which will give you a few hints about this wonderful place.

You got a great answer from Tibley Bobley and I concur with her assessment - I am sure that she will be a real help for you.

In future though why not post your question at <./>AskH2G2</.> where you will reach a good cross section of the community

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