Recording cash transactions from the Sales and Purchase Ledgers in the Nominal Ledger - Single Transaction Method
This page describes using the Single Transaction method to record cash transactions from the Sales and Purchase Ledgers in the Nominal Ledger. Please refer
here for details about the Double Transaction method, and
here for an introduction.
---
If you are using the Single Transaction method, your cash transactions will be recorded in the Nominal Ledger through the Transactions that will be created from Invoices and Purchase Invoices. The Cash In and Cash Out records that you create from these Invoices will have no impact on the Nominal Ledger (no Transactions will be generated from these Cash In and Cash Out records. Records that you enter directly to the Cash In and Cash Out registers with no related Invoice will cause Nominal Ledger Transactions to be generated. This system might be suitable where invoicing and cash handling are carried out by a single person or in a single office.
To set up a Single Transaction system, follow these steps:
- In the Sub Systems setting in the Nominal Ledger, ensure the Invoice, Purchase Invoice, Cash In and Cash Out options are selected.
- In the Cash Book module, select the Cash Collection option in the Cash Book Settings setting but do not select the Payment Mode Control option.
- Again in the Cash Book module, enter at least two Payment Modes. In both, set the Type on flip B to "Cash". In the N/L column on flip C, set one Payment Mode to "Generate Transactions" and one to "Do Not Generate Transactions". If you have more than one Cash Account, enter a twin set of Payment Modes for each one.
- Enter one Payment Term record with a Cash Account and with "Cash" as the Type. You can do this using the setting in the Sales or Purchase Ledgers. If you have more than one Cash Account, enter a separate Payment Term for each one.
- When entering a Cash Invoice or Purchase Invoice, enter the appropriate "Cash" Type Payment Term. When you mark the Invoice as OK and save, it will be treated as paid. There will not be a posting to a Debtor or Creditor Account, but instead there will be one to the Cash Account from the Payment Term.
- After marking the Invoice as OK and saving, you can create a Cash In record (in the case of an Invoice) or a Cash Out record (in the case of a Purchase Invoice) from it by selecting 'Cash In' or 'Cash Out' from the Create menu.
Specify the appropriate Payment Modes and Expense Accounts in these Cash In and Cash Out records. The Payment Mode should be "Do Not Generate Transactions". This will mean that when you mark these Cash In and Cash Out records as OK and save, no Nominal Ledger Transactions will be generated. You must specify an Expense Account, but the choice is academic because there will not be a Nominal Ledger Transaction.
- You should also follow the procedure described in steps 5 and 6 when you enter Receipts and Payments. Use a "Do Not Generate Transactions" "Cash" Type Payment Mode in each Receipt and Payment. This will be transferred to the resulting Cash In and Cash Out records, which will therefore not generate Nominal Ledger Transactions when you save them after marking them as OK.
- If you need to enter a cash transaction that has no stock implications, you can enter it directly to the Cash In or Cash Out registers. In this case, specify the "Generate Transactions" Payment Mode. When you mark the record as OK and save, a Nominal Ledger Transaction will be generated.
- The Cash Book Settings setting allows you to specify the Payment Mode and Expense Account that you want to be used as defaults in new Cash In and Cash Out records. Take care with this feature if you are using the Single Transaction method. When creating Cash In and Cash Out records from Invoices (step 6), you should use a "Do Not Generate Transactions" Payment Mode, but when entering cash transactions with no stock implications (step 8), you should use a "Generate Transactions" Payment Mode. Specifying a default Payment Mode may therefore cause confusion, because there will be circumstances where the default is wrong. When creating Cash In and Cash Out records from Receipts and Payments (step 7), the Payment Mode in the Cash In or Cash Out will be copied from the Receipt or Payment and so the default will not apply.
---
Integration with the Sales and Purchase Ledgers, including:
Go back to:
Integration with the Sales and Purchase Ledgers
