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MYOB/Reckon/Xero – Why do invoices go to Trade Debtors and what is Accounts Receivable?
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Published on Saturday, 21 January 2017 09:37
Client – I created some invoices and when I went to look at the Profit & Loss the amounts of the invoices go to Trade Debtors which I understand is the Accounts Receivable (A/R) – why? What is Accounts Receivable? Doesn’t income go to the Sales/Income account?
How – The handling of the invoice amounts to go to the Trade Debtors / Accounts Receivable (different names for the same records) is correct – a sale sits in the A/R until it is paid – every transaction has a Debit and Credit side. (In MYOB, if you open an invoice and hold Ctrl key than hit “R” and let go, you will see Debit goes to A/R and Credit goes to Sales/Income.) The Invoice does go to BOTH A/R and Sales/Income accounts. Now, when you receive the customer payment, a credit is made for the amount from the A/R account and a DR to your bank account to show the deposit of the payment (or Undeposited Transactions if you use that account when banking several payments/cheques together).
If you want to see the Profit and Loss WHEN you are actually paid, then create the P & L Cash Basis report which is under Accounts> Small Business Entity in MYOB.
If you want to put certain sales to certain Sale/Income accounts, allocate directly to a new sales or “4” account in MYOB in a Service/Professional Invoice or set up the Item by allocating the “I Sell” account in the item to a particular sales account, if using Item Invoicing.
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